A sole proprietorship business can also deduct business expenses just like any other business. The disadvantage is you will be taxed on total profits of the business which includes all income also. • Longevity/Continuity- The longevity of a sole proprietorship business is the life span of its owner unless the owner sells or hands down the business to a relative. • Control- The owner of the sole proprietorship business has complete control over every decision of the business. The disadvantage of this would be the lack of additional input from other shareholders could help in expanding or continuing the business.
Income taxes are assessed as personal income for each individual. A general partnership may continue as long as the partners desire to conduct business together. If one of the partners passes away their interest but not ownership is passed on to a personal representative. The personal representative will ensure any profits or surplus left from liquidation of the business are passed to the heirs of the deceased. All partners normally have an equal say in all business decisions.
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.
Consequently, shareholders have no flexibility to alter their legal treatment with respect to one another, with respect to the corporation, and with respect to outsiders” (15-3). However, states provide default provisions for LLC’s and allow members the flexibility to alter arrangements based on their management style and desired outcomes. Corporations also require onerous fees and organizational requirements that must be met. LLC’s have fewer formalities, do not require board meetings and do not impose strict organizational reporting requirements. Tax considerations are also an important part of forming a business and play a significant part when choosing an entity.
With a sole proprietorship, the owner pays taxes on the income from the business as part of his or her personal income tax. The company does not pay any business taxes. The owner can sell his or her business at any time and does not have to meet a timeframe for owning the business before selling. An owner of a sole
The vendor will be function in effort to make a profit as is with all businesses. The problems can come when the vendor needs to increase profit and since the contracts are normally a fixed price, the only way for them to do so is to decrease expenses. This is a viable option as long as they meet the conditions specified in the contract (Bucki, 2012). When outsourcing to another company, your organization is now tied to the financial well-being of the vendor. The problem can arise when after contracting out the IT functions of the organization and paying the fees negotiated, the vendor goes bankrupt leaving the companies who have contracted to them without an IT resource (Bucki,
Public limited company (Tesco) The purpose of a public limited company is to sell goods and make profit. Also to satisfy our needs. Public limited company (Tesco) is Limited liability Company this means their personal possession won’t be taken to pay off debt. Tesco is a large business because they operate in different countries and have more than 5,000 staff members. Firstly, limited liability business shareholders are not liable for the business debt.
Delaware Corporation Law Have you ever wonder why majority of the fortune 500 companies has chosen to incorporate their business in Delaware? Well it’s not because of taxes, although Delaware like every other state tries to keep its corporate tax rates low and competitive. There are a few advantages why companies decided to incorporate in Delaware, for instance; • As a state that welcomes corporations with open arms, Delaware provides such financial incentives for corporations as freedom from personal property tax, intangible property tax and even sales tax. A bigger incentive is the absence of a corporate income tax, provided the corporation is not doing business within the state. Furthermore, Delaware corporations pay
In order for a corporation to become incorporated it must follow the general corporation of the state. An advantage of a corporation is that it is its own legal entity and thus does not hold any legal or monetary liability on its shareholders. In a limited liability partnership, the partners are only liable for the amount of monies invested in the organization, however that is not the case with a corporation. In a corporation the share holders bare “NO” liability at all. The downfall of a corporation is that of double taxation.
* Expansion: You can’t bring in anybody else into the business. If you decide to expand the business, you’ll have to depend on personal wealth, or loans. Personal loans are hard to get and usually require collateral, and a hefty down payment. Most owners decide to use their personal credit cards. The advantages to a sole proprietorship are, there is no startup cost, and you just simply start collecting money for exchange of services or goods.