Business Structure
Sole Proprietorship
A business with one owner who is responsible for all features of the business. Everything that happens in the company from the daily operation to the legal obligations are controlled by one individual.
Sole Proprietorship Advantages:
• Convenience - Usually the least costly to begin. Sole proprietorships are easy to start up. They entail acquiring the proper licenses and permits. Regulations very from industry, state, and county. There is no administrative configuration.
• Control- Owners are permitted to organize the company in the way they prefer. All choices about how the business will operate are made by the owner. The owner has the choice of hiring someone to run the company or doing it themselves.
• Profit Retention- Revenues from the establishment can be reinvested or distributed straight to the establishment’s proprietor.
• Income Taxes – There are no business taxes and profits or losses are filed with the proprietor’s personal tax return.
• Location - Moving the business or expanding it into another state is relatively easy. Usually requiring registering the DBA in the new state. Since every state either has a different income tax or no taxes the sole proprietor needs to be aware of any change in state taxes. Budgeting for taxes can have a major impact on the financial aspect of the business.
• Dissolution- Dissolving the business is a simple matter of paying off any outstanding debts and not taking on any new business
Sole Proprietorship Disadvantages:
• Liability – There is no protection of personal assets. If the company is sued the personal assets of the owner are at risk as well as the assets from the business.
• Financial - It is also harder to get business financing for expansion and growth. Usually limited to personal savings or consumer loans.
• Longevity – If the owner is unable to work for any length of time the business is more likely to fail.
• Burden - All administration of the establishment is the
A business with one owner who is responsible for all features of the business. Everything that happens in the company from the daily operation to the legal obligations are controlled by one individual.
Sole Proprietorship Advantages:
• Convenience - Usually the least costly to begin. Sole proprietorships are easy to start up. They entail acquiring the proper licenses and permits. Regulations very from industry, state, and county. There is no administrative configuration.
• Control- Owners are permitted to organize the company in the way they prefer. All choices about how the business will operate are made by the owner. The owner has the choice of hiring someone to run the company or doing it themselves.
• Profit Retention- Revenues from the establishment can be reinvested or distributed straight to the establishment’s proprietor.
• Income Taxes – There are no business taxes and profits or losses are filed with the proprietor’s personal tax return.
• Location - Moving the business or expanding it into another state is relatively easy. Usually requiring registering the DBA in the new state. Since every state either has a different income tax or no taxes the sole proprietor needs to be aware of any change in state taxes. Budgeting for taxes can have a major impact on the financial aspect of the business.
• Dissolution- Dissolving the business is a simple matter of paying off any outstanding debts and not taking on any new business
Sole Proprietorship Disadvantages:
• Liability – There is no protection of personal assets. If the company is sued the personal assets of the owner are at risk as well as the assets from the business.
• Financial - It is also harder to get business financing for expansion and growth. Usually limited to personal savings or consumer loans.
• Longevity – If the owner is unable to work for any length of time the business is more likely to fail.
• Burden - All administration of the establishment is the