Business Case Study : Sole Proprietorship

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Sole proprietorship: 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. • Liability: 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. • Control: 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. • Location(Expansion): 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 ... 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.

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