The most basic of all business legal structures is the sole proprietorship. For new start-ups the choice of becoming a sole proprietorship is the simplest of all business forms but is it the best? I would talk about the pros and cons of a doing business as sole proprietorship.
A sole proprietorship is a business of one without corporation or limited liability status. The individual represents the company legally and fully. Common proprietorship structures include part-time businesses, direct sellers, new start-ups, contractors, and consultants. All debts of the business are debts of the owner. The person who sets up the company has sole responsibility for the company's debts. There are more than 25 million business firms in the U.S. today. Of these, more than 19 million are small businesses owned by one person. This form of business has several advantages.
Advantages of Sole Proprietorship are a Quicker Tax Preparation, as a sole proprietor, filing your taxes is generally easier than a corporation. Simply file an individual income tax return including your business losses and profits. Your individual and business incomes are considered the same and self-employed tax implications will apply.
Lower Start-up Costs, Limited capital is a reality for many startups and small businesses. The costs of setting up and operating a corporation involve higher set-up fees and special forms. It's also not uncommon for a lawyer to be involved in forming a corporation.
Ease of Money Handling, Handling money for the business is easier than other legal business structures. No payroll set-up is required to pay yourself. To make it even easier, set up a separate bank account to keep your business funds separate and avoid co-mingling personal and business activities.
The disadvantages of a Sole Proprietorship are you are personally Liable…...