Saturday, July 24, 2010

BUSINESS ENTITIES TO CONSIDER

The Sole Proprietorship
lets say you start a consulting business with no employees and you think a sole proprietorship is the logical way to go,get a state business license and the local municipalities,file a DBA with the county recorder open a checking account and now you are in business.While this is the least expensive way to start out other factors can make it the most expensive way of doing business in the long run.
there is no legal distinction between you and the sole proprietorship and no distinction between your personal assets and your business assets.If a judgement is awarded against your business,every personal asset of the owner can be lost.
Another disadventage is that the business can not survive without you and estate planning and taxation issues are at a distinct disadvantage.
Another disadvantage is that you will find it difficult to raise capital.
From a tax standpoint you are missing out on many opportunities to lower your taxes compared to corporations,more about this later.
The major disadvantages are
PERSONAL LIABILITY
LACK OF CONTINUITY
LACK OF THE ABILITY TO RAISECAPITAL
YOU PAY HIGHER TAXES

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