Sole Proprietorship means that the business is owned and will be operated only by one person.
Advantages of sole proprietorship:
Easy and inexpensive to form: Sole proprietorship is the simplest and least expensive business structure to organize. Costs are minimal, with legal costs limited to obtaining needed license or permits.
Easy pass through taxes: Amy’s business is not taxed separately, so it’s easy to fulfill the tax reporting requirements for a sole proprietorship. The tax rates are also the lowest of the business structures.
Full control: Amy does all decisions about her business. Amy is not required to consult with anyone else when she needs to make decisions or wants to make changes, because she is the sole owner of this business.
Amy gets all profits and money.
“Pride of ownership”
Disadvantages of a Proprietorship:
Unlimited personal liability: Because there is no legal separation between Amy and Amy’s business, she can be held personally liable for the debts and obligations of the business. This risk extends to any liabilities brought upon as a result of employee actions.
Lack of someone to share the money risk: Sole proprietors as Amy often face challenges when trying to raise money. Because Amy and other sole proprietors can’t sell stock in the business, investors won 't often invest. Banks are also don’t want to lend to a sole proprietorship because of a perceived lack of credibility when it comes to repayment if the business fails.
Lack of someone to share the workload, knowledge and experience. Amy is alone ultimately responsible for the successes and failures ...
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...are paid to shareholders.
Complicated/costly to form plus ongoing compliance and government regulations to follow. Corporations are highly regulated by federal, state, and in some cases local agencies, there are increased paperwork and recordkeeping burdens associated with this entity.
Lack of privacy.
5. If I was Amy I would choose general partnership. I would plan my business with my best friend to whom I trust everything and who understands everything about business. Because I would like to work with my friend and take a chance to open my own business in type of general partnership. I like advantages of this type of business, and I think that it is a lot easier to handle all problems and losses with someone like my best friend. Also it is good because I can ask advice, I can take day off or vacations, and I will know that my friend my partner is there for me.
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