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.
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