-Liability: There are no limits to liability with this form of business. All personal assets as well as assets obtained for business can be at risk. There is no protection of personal assets to repay damages or debts.
-Income Taxes: As a sole proprietorship, the income flows directly through the business to the owner. This means that any income the business generates is considered income for the individual, and said individual will be responsible to pay taxes as such. Again no difference between business and owner.
-Longevity of the organization: No formal documentation is needed to form a sole proprietorship, only a local business license. Because the owner assumes all responsibility of all business interactions it is very difficult to find another individual that can take such risk by inheriting the business. It is because of this that most businesses formed as a sole proprietorship will cease with the death of the owner.
-Control: One of the advantages of having a sole proprietorship is that the sole owner has sole control. All business matters and decisions are up to the owner. This can be both good and bad as it does limit resources. Lenders are less likely to lend to one individual that is taking all the risk.
-Profit Retention: As mentioned before for the income taxes. All profits and income pass directly through the business owner to the individual. Just as it will be taxed as personal income, all profits are considered personal gain. Profits do not need to be shared with anyone.
-Location (Expansion): To move the business into a dif...
... middle of paper ...
...h state may have different laws concerning this matter.
-Control: The owner, or person that started the LLC, generally has the control, unless otherwise specified to be jointly managed. This gives the owner the decision initially to decide how the company will be managed, depending on how many members etc.
-Profit Retention: The profit of an LLC is split between the members based off the amount of interest the each have. All members are taxed based off their share.
-Convenience or Burden: This is a very populare business form in that it has limited liability as well as not being taxed as a corporation. The downside being it can become difficult to obtain resources as with all limited liability companies, because members are not personally liable for repaying any debt accrued by the company. Members personal property are not affected by the company.
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