In this example, Owen will be the only owner and since he wants to have employees under this business form he is allowed to hire employees whereas if he was thinking of an S- Corporation he could not have any employees. Some other benefits of sole proprietorship: * Filing taxes involves a simple self-employment income tax form since all the profits and losses are pass on to the owner or sole proprietor * No high or any fees or registration requirements- since Owen is investing all his personal savings on this new business not having start-up fees is beneficial. * No payroll set-up * Net earnings of the business are not subject to corporate income taxes but are taxed only as personal income. Some of the disadvantages of sole proprietorship are: * The proprietor is subject to unlimited personal liability for the debts of the business. If Owen fails to pay his business debts, creditors will come
If the business should go under or there was an accident rendering the owner disabled, creditors could not only go after business assets but personal as well. Another huge disadvantage of a Sole Proprietorship is that business is usually terminated and ceases to exist when the owner dies. A sole proprietor can express that the business may continue by stating so in their will, but even then significant planning ahead of time must have taken place and later approved by the courts handling the will. Taxes with regards to a Sole Proprietorship are very simple and definitely an advantage. All profits earned by the company are considered personal income of the sole proprietor.
The sole proprietor has the advantage of maintaining complete control over his or her business. Disadvantages: One of the greatest disadvantages to a sole proprietorship is the lack of cash flow or access to capital like loans or investors. They do not have the advantage of getting access to capital through bonds or shares and credit is based on their personal credit history. The lack of capital keeps purchase power restricted in comparison to corporations. Liabilities can be very heavy for sole proprietors depending on the nature of the business.
This is the simplest form of business, typically has one owner and operates on a small scale and the available owner’s capital and credit is enough. I. Liability- An owner has no legal protection from claims against the business. Assets and liabilities are not differentiated between the business and the owner. II. Income taxes- The business and owner are taxed as a single unit.
Many are simply the means of making a living. Another issue is the limited ability to raise capital. The National Federation of Independent Business Foundation showed that most small business financing comes out of the owner’s pocket. Honestly, if I had been a part of a small business from the beginning I don’t know if I would do anything for the issues that do affect some small businesses. Most people who start a business want to because they want to do something they love and work for themselves and becoming a franchise isn’t exactly their first thought.
Whereas Tesco’s financial statement is made available to them because they have so many shareholders so the finance detail have to be stated to the public if some want to but some shares also the public limited company so the public have to see the finance detail. Tesco is able to raise more capital from the public to expand the business. Also they have limited liability. Tesco can raise capital income by issuing more shares and they have no limit for shareholders. Shareholders who have over 50% of shares can take over the business.
Legal Forms of Business Law/531 November 7, 2011 Sole proprietorship This is the simplest form of business organization. A Sole proprietorship is a one person business, and the owner is the sole proprietor of the business. A Sole proprietorship is easy to establish and takes low cost to start, depending on the type of business. In this kind of business the sole proprietor owns and does all the management of the business and business
Or Financial statements (balance sheet, income statement, statement of cash flows, and statement of stockholders’ equity) are the primary means accountants use to communicate financial information to investors, creditors, regulatory agencies, and others. Choose one of these financial statements and provide an example of the statement from your current organization, if possible. Provide a brief analysis of what is contained on the statement. The text identified three common legal forms of business organizations: sole proprietorships, partnerships, and corporations. IF you were to start or your business (or if you already have started your own business) what type of legal form would you use?
Regular training sessions are hugely important. 5 (i) BUSINESS FORMAT (LEGAL FORM) OF THE BUSINESS My chose of company is “Vega Electronics” - the legal form of this business type is “Sole Trader”- it is the simplest business format and is a business, which is owed and operated by one individual. In the world of Business there is many Business Formats. Some of the main categories are: * Private companies in private sector – these are organizations that are privately owned and not part of the Government – this could be corporations (profit and non- profit ), charities and partnerships * The Public sector – these are organizations, that are usually owned and operated by the government, this could be provincial, federals, state or municipal governments 5 (ii) Advantages of “Sole Trader” Business format are : * Ability to control every aspect of the business – unlimited span of control in terms of the business * Only one layer of taxation- which means the business is not required by law to file a tax return as a business * The owner of the business can chose their own pattern of working hours- which gives more
Thoma also gives an example of a business owner who is looking for a worker that can operate a specific piece of machinery for ten dollars an hour. However, the owner can’t find a worker with the skill but a worker like that exists but the pay rate is too low to support his family. The author states this could be viewed as structural unemployment but truly it is cyclical because the economy causes the business owner to offer a lower pay rate than what is