Sole Proprietorship
Sole Proprietorship is a type of business where the owner and operative of the business you work for. Thus meaning the owner controls all aspects of the business from management, major decision, insurance, debts, and taxes.
Liability: All liability is responsible to the owner. Debts, expenses, and injuries that may occur are liable to the owner. If business is poor and the owner has to cease all work, creditors can satisfy all debts by wiping out all personal assets if the debt has not been satisfied prior to ending.
Income Taxes: The sole proprietor reports all earnings and losses on a 1040 but if the income is large, then the owner must off set this by writing off business expenses to avoid higher taxes.
Longevity or Continuity of the Organization: If the owner passes away the business cannot continue because the owner is in full control.
Control: The owner is in full control of the business is conducted. Finances, operation, and the life of the business is sol
Profit retention: The owner is the sole profiteer.
Location: The Company can be run from home or a building. The owner must file for a business license within that county can add heave all codes and sanctions. The owner can chose to move the company or expand without the request of others.
Compliance: Sole proprietorships are that the owner is his or hers owns boss. They are not obligated by rules set forth by stockholders or managers. They run their business as they see fit. The disadvantage to this type of business is that if the owner makes a bad decision and has to shut down their business, any money owed to lenders must be paid in full and creditors can come after all their personal assets to pay off lenders. This includes cars, homes, a...
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...operate like a partnership.
Control: LLC’s can be managed by members, non-members, or management committees.
Liability: Limited liability is the same as C and S corporations. Limited liability also protects the assets of its members from the original one of other members.
Longevity: An LLC can continue to operate if the owner dies or leaves owners can also pass down their ownership to family.
Income tax: An LLC can choose to be taxed as a corporation, a sole proprietorship /or partnership.
Compliance: LLC’s do not have board of directors, annual meetings, or record keeping like corporations.
Location: LLC’s can exist in more than one state. They must comply with that particular States rules and regulations.
Advantages: Limited liability, investors, tax options, and control flexibility.
Disadvantages- Less structured, pass through taxes, and finding investors.
Continuity:A C- Corp has an indefinite life span. As long as corporation can stay relevant and offer products that are useful to the world a business can have a long life.
Longevity – The business is owned by its owners and by its shareholders. If an owner or shareholder changes or dies the business continues on.
Capital is a major factor for decision making. Since the business involves a group then the three forms of business exposes the group to a greater capital availability. The liability of members is also an important factor. The partnership offers unlimited liability to the members of the partnership while the corporation and Limited Liability Company allows the members limited liability and thus their personal assets cannot be interfered with in the event of a liability. The decision making process is for the business associations but the input of all members results to the making of good and informed decisions. Finally, the taxation practices for various forms of associations informs the decision. Corporations are often taxed twice whereas the LLC and partnership business is taxed
Limited Liability. When it comes to taking responsibility for business debts and actions of a corporation, shareholders’ personal assets are protected. Shareholders can generally only be held accountable for their investment in stock of the company.
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
Being the owner of LSU, Joe probably operates as a sole proprietor. It is recommended that the business change its entity selection to limited liability company (LLC). The main advantages to an LLC are the protection the LLC owners receive from business creditors, and the fact that the owners can still participate in the management of the business.
A sole proprietorship is a type of business that is owned and operated by one person who is responsible for all the debts. Forming the business is really easy to start off with. Also the owner receives all the profit from the business and is his or her own boss. The down side to owning a sole proprietor business of your own is it is really hard to find sources for funding the business for it to grow and expand. An example of a local proprietor business is Martha’s Kitchen. Martha’s kitchen is a really small restaurant on the outskirts of town. Martha chose to open a diner at her location because it is joined with a gas station and it is in a remarkable location for a restaurant business. Martha’s kitchen is open from 5:30 a.m. to 11:00 p.m. She serves the best peach cobbler around.
Unlimited life- unlike partnership and proprietorship, the life of the organization does not depends on the life of the owner who started it.
One awesome advantage that comes with an LLC, other than the protection from legal liabilities like stated above, is the ease of getting it. They also take much less paperwork and effort to get started so they are fairly cheap. Another nice plus that comes with an LLC is that you have fewer restrictions on how you can divvy out your money(profit sharing). In my opinion corporations actually have two of the best advantages out of all the available options. Being a corporation allows you to sell stock, so you
There are many types businesses in this world; these include Sole trader, Plc, Ltd, Partnership, Co-op and franchise. These types of businesses are all different from each other. Some of them need just one owner, some have hundreds.
The operating agreement is the members of LLC have a decision on how to operate the various aspects of the business (Miller, 2014, p.41). It is simply a contract. The LLC operating agreement must accommodate setting up sub-LLCs. Many states do not require the operating agreement because LLC exist. With other states, the operating agreement should be written so their interest can be protected. According to Miller, operating agreement typically contains provisions relating to the management and how future managers will be chosen or removed, how profit should be divided, how membership interests may be transferred, whether the dissociation of a member, such as by death, will trigger dissolution of the LLC, whether formal members’ meeting will
Perpetual Existence: An LLC has a separate legal existence from its owners. They may die or sell their shares, but the LLC’s continues to exist. It stops existing after the management has successfully concluded the striking off process to dissolve it.
There are two types of limited companies: Private and public. Shareholders own private limited companies. Members of the public cannot buy the shares and the shareholders cannot buy or sell their shares without agreement from the other shareholders. Family owned businesses or larger businesses such as Virgin would fit into this category. Public limited companies have shares on the stock market and can be bought and sold by any member of the public, this way the company can raise further capital and expand their resources. Tesco and British Telecom are such examples. Both these types of limited companies have limited liability, which means the owners of the business are only liable for the amount they invested in the business (unless the debt is so large that the business has to be sold to repay the debt).
There are many different types of business structures, but if you own and operate a business that it is a sole
4. Control: the members of the LLC have the ability to set up control of the corporation as they see fit.