I have always wanted to start my own business. Whenever that time comes I will start it with the easiest organization of business structure which is sole proprietorship. Sole proprietorship has no formalities. The owne4r has control of all profits of the business and has control of the management without consulting with neither partners nor share holders. The owner also have unlimited liability for al debts of the business and the income loss from the business will be reported on his or her tax return along with all other expenses.
The basic legal environment of sole proprietorship is that disaffected, unemployed, and injured contractors may sue a former client for employee benefits, claiming the company misclassified them as contractors when, in reality, they were true employees. Contractors have successfully sued for stock options, profit sharing, and retirement benefits. However, if contractors sue at all, they usually sue for unemployment insurance, disability payments, or workers compensation.
The client company also runs the risk of being audited by one or more government agencies seeking to recover uncollected fees, taxes and penalties, or attempting to enforce applicable regulations, laws and court rulings affecting the status of employees.
A company that is found by the IRS to have misclassified employees as independent contractors may be responsible for paying all withholding taxes, plus interest, even if the worker already paid the taxes themselves. In addition, the IRS may impose... [continues]
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