Advantages And Disadvantages Of A Sole Proprietorship

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Sole Proprietorship
Sole proprietorships are typically businesses that have one owner. There many advantages to operating a business as a sole owner. One of those advantages is that it is fairly easy to form. When operating a sole proprietorship, filing an independent tax report for your business is not mandatory. It is optional for the owner to hire employees to help run the business. The owner is in charge of making all business decisions and transactions. Sole owners have the ease of selling their business, closing it or giving it to his heirs. While opening businesses sometimes require you to obtain a business license, sole proprietorships are typically less expensive than others. Also, it is often less expensive to start a sole proprietorship.
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The S Corporation is different from the C Corporation because it has a special tax status. According to “It gets its name because it is defined in Subchapter S of the Internal Revenue Code.” Business owners who are wanting to operate as an S Corporation has to file for that status with the IRS and they must meet all guidelines. Other than the tax status, C corporations and S corporations are very similar in their operations.
The shareholders of both corporations are not responsible for obligations from their business on a personal level. This is referred to as limited liability protection. There are some advantages to operating as an S Corporation. An S Corporation owner has the benefit of having their personal assets being protected. This is to say that if the business does not succeed, the creditors are not allowed to go after the owner’s personal property such as their house and personal bank account. S Corporations also are not required to pay federal taxes. S Corporations are allowed to report any losses that the business may have on their personal tax filings. This can be a huge benefit to the owners during the beginning phase of the business. One of the main advantages of operating a C corporation is that there is no limit to the number of owners allowed. Therefore, if you are planning to start a business and you know that you will have many owners, then this will probably be your best business option. Most
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Each state may use different regulations, and you should check with your state if you are interested in starting a Limited Liability Company.” The owners in a Limited Liability Company are called members. There are some limitations on what type of businesses is allowed to form as an LLC. Generally speaking, banks and insurance companies are not allowed to form LLCs. Unlike corporations, LLCs are not required to have meetings on a regular basis. Also with LLCs, there is no ownership restrictions placed on them. With LLCs, they are allowed to use the cash method for accounting instead of the accrual method. This means that their income is not shown until they have actually received it. Like sole proprietorships and partnership, LLCs have the luxury of avoiding being double
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