I would choose a sole proprietorship because it is a very informal business structure. Unlike corporations, partnerships and limited liability companies, a sole proprietorship usually has limited legal requirements. You may have to procure professional or local licenses in minimal cases, but you don 't have to file merely for becoming a proprietor.
A sole proprietor is better able to focus on the operation of the business due to the simplistic setup and management (Mancuso, 2014). Financial records are required for the business, accounting and tax purposes but you don 't have the burdensome documentation/filing requirements of formal business structures. Business owners sometimes overwhelmed with record-keeping requirements of LLCs or corporations and get distracted from making crucial business decisions.
Another bonus of a sole proprietor is there aren’t any restrictions against merging personal and business assets and can immediately access the majority of earnings for personal use. One should set aside funding for taxes which are commonly paid by sole proprietors to avoid tax penalties. You only have to maintain one checking and savings account for personal and the business, and you can use all funding for personal use if needed.
Sole proprietors have overall flexibility in their business and have the
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Shareholders can only be held accountable for their investment in company stocks. Corporations can increase funding through stock sales. A corporation may deduct the cost of benefits it provides. A disadvantage is the process of a corporation requires additional time and funding than other forms of organization. Corporations are monitored by federal, state and local agencies, and as a result may have additional paperwork to comply with. Corporations may have higher taxes and dividends paid to shareholders are not deductible and the income can be double
Corporation – “A business organization that exists as a legal entity and provides limited liability to its owners.” (Longenecker, Petty, Palich, Hoy, Pg. 205) The main advantage of a corporation is that the business liability falls onto this entity instead of the individuals that own it. The disadvantages of this organization are found mostly in its formation. A corporation is expensive to create and requires compliance with state
LLCs must typically pay more fees to file as LLCs compared to some other business entities or sole proprietorships. Additionally, many states require yearly renewal fees. However, these fees are usually less than what some other corporations have to pay. Because of the protections afforded to LLCs, some types of businesses are ineligible to file as LLCs. Banks, insurance companies, and medical service companies are examples of businesses that can not be a LLC. Another big disadvantage is taxes. Although LLC’s allow owners to avoid federal taxes, you may actually end up paying more than it would with a different corporation, depending upon the nature of the business. Working with an accountant and/or tax lawyer is a really good idea when planning your business and forming your LLC but can also be quite expensive. The LLC business form is a relatively new concept. As a result, not a lot of cases have been decided surrounding LLCs. Case law is important because of predictability. If you know a court has ruled a certain way, you can act in a specific way to protect yourself. But if not many laws have been established yet, there is a certain vulnerability with your corporations that could expose you to greater
My budget below does not state this but, I would choose sole proprietor as my tax status. My reason for this is, I have run my own business as a sole proprietor and feel comfortable doing so at this time. Since this is a make believe budget I have a pretend accountant and lawyer and would need to further scrutinize my options. I did go to the IRS website and read about different things that would need to be done but I will admit I had an overload of information. The t...
A sole trader is a one man business. There is just one manager. Although they are the sole manager and owner they can employ staff to work for them. They can employ as many as they want to work for them. A sole trader is self employed, this means they work for themselves, they employed themselves, they for nobody. Sole traders trade with others. They may trade expertise, an example of this would be a business consultant taking on a big job and needing an extra hand just for that job, so this person may employ a person with the expertise he/she needs. Because a sole trader is the sole owner he/she keeps all the profits, unless he/she has any employees. The owner of the business makes all the decisions, he/she will not have anyone telling them what to do. When one wants to set up a sole trader business it is relatively easy. There is little paper work involved bec...
The limited partner only risks what they invested in the business. The downside is if the limited partner becomes active then they could potentially lose personal assets. The S corporation is a more favorable tax option on income. The disadvantage is there is certain requirement that must be met. The LLC is a great option. With this type, the risk is only what is invested unlike sole proprietorship. It is easy to set up, and has tax advantages. The downside is if a corporation wanted to switch to C, it would have to pay additional taxes. I do believe the option they picked is best for them at that time. C has tax advantages. If they started with LLC and later wanted to change, it would cost them. C is a great way to get capital as well.
Imagine this, you are looking to buy a used car. You go to a car dealership that is very popular. They show you a car that you really like and you tell them that you are very interested, you just want to evaluate the alternatives first. You decide to go to an another car dealership, but this time it is a dealership that just started business. This dealership shows you a car very similar to the car you liked at the other dealership, and on top of that, it is almost $10,000 cheaper. Immediately, you know that the dealership is giving you a good deal and without hesitation you buy the car. A few months later you begin to notice that the transmission is going out in your recently purchased car. You go to the dealership and complain, but they say that’s too bad, you bought the car as is. You are beyond frustrated. You tell your friends to never buy a car from that dealership. If the company continually screws over their customers, the business will be unethical and once others find out about the poor business, it will spread like a wild fire.
In conclusion I think your future needs and concerns for your business would be best met by forming an LLC and in the event you wanted to form a corporation later down the road, it is relatively easy to make the move from an LLC to a corporation.
There are many different types of business structures, but if you own and operate a business that it is a sole
Sole Proprietorship is one individual or married couple in business. Sole proprietorships are the most common form of business structure. This type of business is simple to form and operate and may enjoy greater flexibility of management, less legal regulation, and fewer taxes. Although this is the easiest form of business to start, "the income and losses are treated as personal and will be filed on a Schedule C along with the regular Form 1040 tax return" (IRS, 2004). If profits are minimal, the owner will be paying less in income taxes with this form of business than with a corporation. However, the business owner is personally liable for all debts incurred by the business. Sole proprietorships cannot take advantage of special business income tax rates since all income is considered individual income. In addition, sole proprietors are not protected from personal liability if they get into trouble with a client. If an upset client decides to sue, they sue the proprietor personally. If the proprietor must declare his company bankrupt, he files for bankruptcy personally. Moreover, by definition, a sole proprietorship can have only one owner, and that owner must be a "natural person" (i.e., not a corporation, trust, LLC, or other such entity.) Finally, one cannot sell or inherit a sole proprietorship.
Although small businesses do not make a lot of major deals with large investors, most small businesses create profit revenue greater than large corporations. Small business creators are very brave considering only ten percent of small businesses survive. Unfortunately, some communities do not support local small businesses; they only support the large brand name and force small businesses to die out. Since small businesses will not have a name brand known around the world, many people from communities will not support them because they are not known on a national scale. “This, in turn will affect the local economy and drive capital out of their local economy. On average, for every one hundred dollars spent in an economy, if spent on a
Sole tradership is when the business is fully owned and managed by one person, though others can be employed to help run the business. As the sole traders only financial income is from the business and/or bank loan, they do not have the resources to expand and cover regional or national areas. These types of businesses are located in the small business sector and usually cover local areas. Such businesses could be hairdressers, corner shops or market stalls etc. Sole traderships have unlimited liability so if the business fails to pay its debts the financial responsibility falls on the owner/s to pay the debts in full even if they have to sell their business, personal possessions and assets.
Making the decision to open your own business is a major life event. Starting a new venture can be exciting as well as rewarding. The first step to becoming a business owner is choosing the type of business you would like to run. This business can be something that you have wanted to start up yourself or you can go with an established franchise. Are you willing to share the profits in exchange for the relative safety of a franchise or would you prefer the risk and rewards of pursuing your own vision? Franchising is a continuing relationship wherein a franchisor provides a licensed privilege to the franchisee to do business and offer assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration
There are many advantages and disadvantages when owning your own business. When you own you own business, it’s known as a sole proprietorship. But with any type of business, there will always be advantages and disadvantages.
Starting your own business can be exciting and it can become a well- rewarded experience. Being your own business includes great benefits, create your
Business involved by two or more members of the family and is owned within the family is the simplest way to define family business. In this type of business the positions in the company is filled according the family blood. The founder of the business is usually the skull of the company, the rest of the positions are taken place by the family member which are usually higher positions where else other positions are filled by non family members.