Sole proprietorship is one the most simplistic forms of business and also the most common. It is owned by one person and is usually run and managed by the owner. They are usually a smaller company with minimal employees. There are several advantages to this type of business. It is very simple business to start and terminate. The owner has free will to operate and change the company at any time without permission from other people. The sole owner has all rights to any proceeds and the owner is only taxed once on their personal taxes. Some of the disadvantages are the owner having limited resources, the owner is personally responsible for the debts of the company and the business dies with the owner.
The owner of a sole proprietorship is responsible personally for the business liabilities. If the business fails then creditors can attach to the owners personal assets to pay off business liabilities.
• Income taxes:
The owner and business are taxed as one entity. The owner will file the business profit or loss on their personal taxes yearly.
• Longevity or continuity of the organization:
The owner has sole ownership of the business and may continue the business as long as they wish or suspend operation of the business at any time.
The owner has full control of the business and does not need to consult with anyone in making decisions for the company.
• Profit retention:
The owner receives all profits and does not need to share with anyone else. This is a great advantage of this business.
The owner has full control so they do not need approval to move the company to other states. The laws of the state will dictate what licenses may need to be carried for the ne...
... middle of paper ...
...th an S-corporation since the business is not taxed. The shareholders are able to retain more of their profits since they do not have to pay income taxes at the business level.
The business can still be run by the owner or shareholders. This is an advantage of an S-corporation for an owner who wants to be actively involved and also remain on control of the business.
Since you are interested in expanding and branching out an S-corporation will allow for this. You will have to follow the laws and guidelines of the state and contact the IRS to make sure that it follows the rules but using the same business name in multiple states is possible with an S-corporation.
An S-corporation is able to have a single class of stock. In the circumstance that additional capital is needed they may sell this stock to bring in cash but also they will remain in control of the company.
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- Summary Shania is interested in starting her own Christian coffeehouse that she wants to call The Gathering Place in Colorado. Her Husband is onboard with the idea and want to be involved in the capital of the business but not the operation and management. Her sister, who is a homemaker wanting to escape home, and Carlos, Shania’s neighbor that want to make extra income, are interested in working with her in her new business venture. Shania has researched some franchising opportunities and other business opportunities that would fit her vision such as sole proprietorship, partnership, corporation, LLC and joint venture.... [tags: Corporation, Business law]
1067 words (3 pages)
- Urban outfitters: assignment#1- urban outfitters continuing case study part 2: creating a business 1. Identify at least three challenges when setting up a business. Explain why they are Challenges. One of the challenges to start up a new business is choosing the kind of business to start. Most of the time business begins with simple idea and challenges to reality. But before we Invest on our idea to a new business we need to consider what kind business we try to establish.... [tags: Business Management]
1297 words (3.7 pages)
- There are three types of businesses: sole proprietorship, partnerships, and corporations. Each type has its own advantages and disadvantages. The types of businesses will first be defined, then illustrated by using fictional companies; demonstrating the advantages and disadvantages of each one. A sole proprietorship business is one that is solely owned. Meaning, that it in regards to all legalities and operations, the owner is responsible for all profits and losses. A partnership is a business in which more than one person owns and operates the business.... [tags: Corporation, Business, Sole proprietorship]
740 words (2.1 pages)
- Opening up a sole proprietorship would best achieve all of Shania’s business goals. Unlike a joint venture, a franchise, or some other type of corporation, if Shania were to open a sole proprietorship, she would be in charge. A sole proprietorship is a very simple business model and she would be able to write it off on her personal income tax returns (Hawkins, 2001). This type of business is a little more risky and there are more liabilities however, for a new business, it would be worth the risk (Hawkins, 2001).... [tags: Husband, Marriage, Sole proprietorship]
904 words (2.6 pages)
- The name of my business will be International Discount Auto Parts; my main objective will be to provide national and international customers with quality auto parts at a discounted price from that of our competitors. I have chosen to open my business as a sole proprietorship because this is the most simplest type of business to set up and because this will give me control over the business. Accounting plays a very important role in any business; therefore, I will be sure to hire an accounting staff that has experience with record keeping, internal controls, and cash management.... [tags: Business Plan]
955 words (2.7 pages)
- 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.... [tags: Corporation, Business law, Types of companies]
1024 words (2.9 pages)
- A sole proprietorship is a business owned by one person. This is the simplest type of business to start and is the least regulated form of organization. A sole priprietor performs most of the major tasks and functions such as overall manager, sales manager, and finance manager. The owner not only retains the revenue and title to all of the business’s assets, such as profits, but is also responsible for all losses, debts, and aliabilites incurred. Although a sole proprietorship must comply with all required licenses and permits necessary for its type of business to operate legally, there is no legal requirment to start the business operation.... [tags: partnership, major tasks, functions]
883 words (2.5 pages)
- ... The partnership can maintain and file records showing how they share profit and loses (Dlabay, 2011). iii. Longevity: Similar to a sole proprietorship, in case of death or incapacity of a partner the business can cease to exist. However, if there existed a buy-sell agreement, the remaining client can buy the heirs of incapacitated or deceased partners. Vitally, the ownership of general partnership does not pass to personal representatives (Dlabay, 2011). iv. Control: Control is exercised by all partners.... [tags: liability, icnome taxes, logevity, control]
1522 words (4.3 pages)
- Running head: DIFFERENT TYPES OF BUSINESSES 1 Different Types of Businesses When considering to open a new business, there are different options you can choose from: a sole proprietorship, a partnership, and a corporation. This paper will explain the strengths and weaknesses for each option, which will help you decide which is the best option for you when deciding which type of business is best to open. To begin, there’s a sole proprietorship. This is the easiest type of business to open, therefore, the most common.... [tags: Corporation, Business, Corporate tax, Loan]
1251 words (3.6 pages)
- Sole Proprietorship A sole proprietorship is a business owned and controlled by a single individual. There are more sole proprietorships than any other type of business available (Lau, 2011). It is a simple type of business to set up, as well as simple to terminate. The proprietor has the freedom to determine operating hours, what services or goods to provide, where it operates, and what contracts to enter into without needed to consult another party. With full control, however, comes full liability.... [tags: single individual, liability]
1151 words (3.3 pages)