Sole proprietors have limited funds to support the firm’s expansion or to absorb temporary losses. Also there are tax benefits that make sole proprietorship very interesting to consider. This means that the income from the company will be rolled into the income for Mr. Ahn, as well as his liabilities. ("Definition of a Corporation") Advantages of a Sole Proprietorship. Sole proprietorship involves low overheads because the sole proprietor manages the business affairs himself. A rafting company vs. A resume service), the number of people involved, potential income, and potential longevity. hat is all this about the different things that determines cash flow? Through the document suggestion in different sides are presented. Business Environment Sole Proprietorship; When people think of starting their own businesses, a majority think of venturing out on their own. But in some cases licence might be required. Therefore, this research paper analyzes a case that involves a small business owner (Kelly) who plans to expand her business. The company is not an individual legal enterprise. They will have knowledge of what is happening on the production floor and will have a view of…… [Read More], com, p.2). First, sole proprietorships are easy to form. In some cases, the cost and ease of setting the entity up might matter -- though such costs can easily be outweighed by liability risks for most businesses. The real issue is not that there are options, but which option should be chosen. Sole Proprietorship, Partnership and Corporation Business Types Essay ...a business with no funds or management experience can prove to be difficult. However this…… [Read More], Legal Structure of Business In Madura's (2006) own words, this is "a business owned by a single owner." As the business is a new idea, and will initially only involve a single person, the idea of a partnership may be eliminated. I am a longstanding manager in a family firm which is a small but growing organisation. Sole Proprietorship Essay just from $13,9 / page. Sole proprietorships have unlimited liability since the owner is responsible for all debts accruing to the business (Cheeseman, 2010). The other and faster way is by heating them. When determining which form of business organization to adopt for one's business, it is important to consider a number of variables before making a decision. The truck will be mobile, selling at multiple locations around town. evenue stream will allow for investments in further upgrades and purchase of new mobile home units, thereby making the property even more marketable as an upscale mobile home community. As the entrepreneur, I am individually responsible for the company's liabilities and debts. An unincorporated business that is owned by one individual is a sole proprietorship. You are well-known in the community and could obtain a loan since you have successfully been in business before. Make your land look beautiful as nature intended, with a little help of the hands of Joe! Common proprietorship structures include part-time businesses, direct sellers, new start-ups, contractors, and consultants. In such a situation, a person is considered one with the business. Advanced Accounting […], Expansion of Acme Fireworks Introduction There is a great deal to reflect on during an expansion of a business. Despite its simplicity, a sole proprietorship offers several advantages, including the following: 1. Halved coconuts can be dried in one of two ways. There are also different rates of taxation for the two entity types: "a corporation pays 15% federal income tax on taxable income up to $50,000; 25% tax on income from $50,001 - $75,000; 34% tax on income from $75,001 - $100,000; 39% tax on income from $100,001 - $335,000; and 34% tax on income over $335,000" while a married sole…… [Read More], Small Business This is a common law relationship, and is not a gift or a contract for sale (Sullivan & Sheffrin, 2003). A sole proprietorship is a business owned by one person. D. Sole proprietorship. Thus, sole proprietors have difficulty engaging in airplane manufacturing, shipbuilding, computer manufacturing, and other business that require substantial funds. The creation, operations, and liquidation processes of a partnership firm are quite different than those of a sole proprietorship or a joint stock corporation. In the United States, as in many other countries around the world, the three main forms of business structures are the sole proprietorship, the corporation, and the partnership. Note that, unlike the partnerships or corporations A sole proprietor may have limited funds available to invest in the firm. Sole proprietorship Essay Sole proprietorship forms by far the most common form of business ownership for start ups. From an accounting standpoint the business is treated as a separate entity from its owner. Topics: Economy, Ownership, Partnership, Sole Proprietorship, Topics: Employment, Organization, Ownership, Partnership, Sole Proprietorship, Supply Chain, Tax, Topics: Bank, Business Law, Debt, Economy, Money, Partnership, Sole Proprietorship, Study, Topics: Corporation, Economy, Partnership, Sole Proprietorship, Topics: Bank, Corporate Finance, Credit Card, Debt, Economy, Investment, Sole Proprietorship, Topics: Contract, Employment, Justice, Negligence, Retail, Social Institutions, Sole Proprietorship, Topics: Business Law, Common Law, Corporation, Ownership, Partnership, Piercing The Corporate Veil, Sole Proprietorship, A Report on Establishing a Company and Recommendations for Someone Starting an Engine Company, How Global Changes Affect you Business Essay, The Challenges of the Private Sector Business Essay, Prospective Business Man Essay Example Pdf, Financial Positioning for a Brand of Clothing, Managing Financial Resources and Decisions in Business Startups, The Expansion of a Business: a Law Problem Question, The Separate Legal Personalty and Piercing the Corporate Veil. These units have been acquired over a number of years since 1994 and their market values have increased considerably in recent years. Reframing is a multidimensional process, although all three reframing levels must be integrated. Show More. S corporations are legally incorporated entities whose tax status is treated the same as an LLC, with business income "passing through" to the owners' and partners' personal income and being taxed at personal income levels. egistered Limited Liability Partnership- Partners in this type of partnership are not liable…… [Read More], Business Organizations Sole Proprietorship Partnership, ("Definition of a Corporation") Recently he laid off with redundancy payment. Further, each type carries with it specific advantages as well as disadvantages. As a result, it is likely that a clinic will be formed with other practitioners in order to minimize expenses and increase profitability. Easy and inexpensive to form. The sole proprietor will also maintain an inventory or a stock room to maintain his/her goods. At the same…… [Read More], Legal Social and Economic Environments of Business, New Invention These segments will explode over the next ten years as more employees become disillusioned by American corporate culture. Unlimited Liability- This is the first disadvantages of sole proprietorship and it means when a person … Seventy percent of McDonald's restaurants are owned and operated by independent owners. Furthermore, a sole proprietor is a natural person(not a legal person/entity) who fully owns and manages this type of entity. Changing a company organization from a sole proprietorship to an LLC The franchise can be operated as a sole proprietorship, a partnership, or a corporation. The individual has day-to-day responsibility for running the business however they can choose to operate singly or employ other people. Hence it is easy to form and close the business. Individuals may be motivated to start a partnership form…… [Read More], By implementing safety training immediately, Joe will be complying with state laws but also reducing future risk on the job for his team. Advantages Essay on Sole Proprietorship Business activity today is the primary source of economic development all over the globe. Also, shareholders have control over the operations of the corporation, while the owners of the LLC have as much control over the business as a sole proprietor. The company, comprised in part of restaurants run by independent entrepreneurs, is currently considered one of the worlds most successful and largest franchising companies every created. An owner is also completely responsible for losses and credits the business has. Threats: In general, the costs for establishing a corporation can range from a few hundred dollars to thousands of dollars in legal fees. The same will occur with Alex, Bill, Carl, Devon, and Xavier as there farm business developments. A proforma financial statement for ock Hill's first five years is provided in Table 2 and graphically illustrated in Figures…… [Read More], Tax Advise Table of Contents Optional Louise, Tax Advise The tax returns are similar to those of partnerships and are taxed…… [Read More], Basic Concepts of Financial Strategic Management, Finance -- Finance for Strategic Managers -- Stage […], John Caird had been working in an engineering consultancy firm. In contrast, in a sole proprietorship or a partnership, the owners are personally responsible for all of the business debts. Many nonprofits qualify for tax-exemption, but registering as a nonprofit with the state does not automatically make…… [Read More], Person Gives Another Person Some Property for, person gives another person some property for safekeeping, that results in a bailment (Sullivan & Sheffrin, 2003). The culture must engage in self-reflection about how it works, rather…… [Read More], Accounting for Partnerships At the maximum revenue of $144,000 per year the pretax profit would be $63,600. Disadvantages of Sole Proprietorship – Limited Resources, Limited Life of a Business Concern, Unlimited Liability and Limited Managerial Ability. The owner has informed you that the company has received inquiries from several large businesses wondering if the company could create several fireworks displays on a regular basis. It’s very easy to form a proprietorship business since very few formalities and legal requirements are necessary in the formation of this business. Financial Statements. Included as standard are advanced technologies that provide students with the ability to connect to the Internet form literally anywhere while also having a specialized version of the Google Android operating system that automatically backs up their files to storage service DropBox. Perpetual lines of communication must be available for all parties in response to changing dynamics and the occurrence of unforeseen events. Strategic Plan for a New Bed and Breakfast The business […]. Let's review the structure of sole proprietorship first, it is regarded as one of the least expensive and easiest way to start any business as compared to corporative and partnership structure. Although wild-grown ginseng commands higher prices, cultivated alternatives typically weigh more but the Chinese highly prefer the wild-grown version (How to grow ginseng, 2012). Kelly should take some steps while organizing and prioritizing her business growth strategies. The proprietor may feel one thing is true, but the numbers can reveal something different. Sole proprietorship also suffers from the following limitations: 1. Self-Employment 1A) Business owners must take a number of different factors into account when determining the form of business. McDonald's successfully operates as a franchisee corporation. Looking back briefly at history, provides a unique perspective of business as it relates to societal development. This is the simplest form of organization to start with, and is easy to maintain. I would open the business together with a German nephew of mine who has worked for over 25 years as a master baker in the Heidelberg bakery of my German relatives. For this segment of the assignment, I will clarify the main activities of the business, in addition to its aims and objectives. Numerous ways of starting businesses are available to entrepreneurs but still this is most preferred. Management accounting in the words of Drury (2006, p. 7)…… [Read More], Glut-Max Gym As, they want to maintain operational control; but they want some kind of: division of labor, responsibilities and financial contributions. For example, a sole proprietor may have difficulty running a large medical practice because different types of expertise may be needed. This failure suggests that a majority of small business owners may not have as yet realized the crucial success factors necessary for successful implementation of a small business. D. Sole proprietorship. An example of this is a lawsuit, due to the fact that legally the identity of the owner and the business is one and same. My dream business would be a German Bakery that sells traditional German Bakery and Cafe. Therefore, in case of loss or debts, the owners suffer the risks and losses since they have liability for the business. In a partnership, the profits and the liabilities are shared between two people. That person is solely responsible for the business, and there is no complex legal structure. Essentially, finance, from the occupational perspective, has largely got to do with the efficient procurement and utilization of funds. Hence it is easy to form and close the business. He or she does not have any use of…… [Read More], The original farm was a seasonal operation with periods of no production in the winter months. 3. The most important attribute of a corporation is that shareholders in the company are not liable for corporate debts. This form of business has several advantages: The profits from such a company flow through to the income of the partners, so are taxed at the individual tax rates of the partners. Organizational growth entails an increase in the total productivity, sustainability, and competitiveness in the marketplace. This means that the corporation can also incur legal liability arising from the actions of one of its representatives (Thompson, 2003). Show More. However, based on the scenario represented for the individual who has an idea for a product a sole proprietorship would most likely represent the ideal form for the individual to get started with and if the product does turn out to be a success then they could always reorganize the business later on. A sole proprietorship is unincorporated businesses owned by one person and fully conducts the business itself. A new member of the family has just joined the firm fresh from completing a post graduate (level 7) qualification at college. Sole Proprietorship in simple words is a one-man business organisation. AC corporation automatically forms when a business becomes incorporated, and shields the shareholders from being personally liable for the debts and obligations of the company (Carter, 2011). Excerpt from Essay : Legal Terms Sole proprietorship- In a sole proprietorship, one person owns all of the business assets and is the sole decision maker.The sole proprietor has unlimited personal liability for business debts, and all profits and losses pass through the business to the owner (Bouchoux, 2007). This is significant, because it means that a corporation can use the public markets to be able to raise investment capital. Advantage # 8. The paper discuses different forms business describing a scenario where preference of these business forms arises. In businesses that involve numerous members of the same family, the preferred business choice of conduct is the partnership. From the perspective of control, the best form of business organization is the _____. A shift will continue and not focus so much on corporate America but on smaller, independent firms and also small business owner demographics such as Joe's company. They are most commonly chosen because they are the easiest type of business to set up and give the sole owner of the company complete control of the company. SSDS uses an accrual method of accounting and over the past three years has seen volatile sales. All Liabilities fall on the owner. Each different structure has its own set of rules, with each having different tax and legal implications. Continuity is another facet that is required of every business. Small businesses can prove extremely successful when planned properly. An unincorporated business that is owned by one individual is a sole proprietorship. All the liabilities are his personal liabilities. There are no limits to time period an owner can run its business. The risk that the company has is also borne by the partners. Our task is to outline a preliminary interview with Sally to ensure that we ask the right questions. The business is carried out from a number of valuable retail outlets, all of which are owned by Louise personally. For the case of West Casing, these factors when addressed point to an S Corporation being the best option for Steve West and his 6-man crew. This enables certain members of the family to be more responsible for the actions of the business than other members. The sole proprietorship is one of the simplest, and also one of the most common business structures, and is administratively simple as the business is not have its own legal identity, but is an extension of the business owner. Each partner has unlimited personal liability for business debts, and can be subject to pass-through taxation (Bouchoux, 2007). Without knowing the state, it is impossible to know which statute a state might apply. The individual owner makes all the decisions and is held accountable for any matters pertaining to the business. In this text, I concern myself with partnerships. Furthermore, although the economy is recovering, the external environment is still plagued with high levels of competition and…… [Read More], Business Structures The bailor transfers the property to the bailee, and physical possession of the property must be taken for this legal relationship to occur. As a result, some corporations have the potential to raise billions of dollars through the public markets using such financing methods. Michelle is perfectly qualified, and cannot be turned down solely because of her (supposed) pregnancy, and is therefore the top choice according to the criteria. Easy and inexpensive to form. Sole proprietorships … A patent can be enforced through the legal system. The business has no existence apart from the owner. Most entrepreneurs never achieve success in pursuing their dreams because they don’t know how to arrange their business plan in a way that makes sense. You estimate you will need $100,000 to start and operate the gym for 1 year. Also this can reduce his overall risk as the owner and help reduce insurance fees. He intends to create a file on finance for strategic managers which he can use as an aide memoire. There is no legal distinction between the proprietor and the business, which means it is autonomous. Partnerships: Advantages and Disadvantages 1506 Words 7 Pages. What is the market? A business and its forces in its micro environment operate in larger macro environment of … …… [Read More], Proprietorships the Benefits and Drawbacks, These elements are important, because they are showing how these kinds of entities are ideal for a group of individuals that will be directly involved in the business. There choices are sole proprietorship, partnership, limited liability company, and corporation. It should, however, be noted that the roles of both professions do in some cases overlap. Introduction to Sole Proprietorship is meant to provide an overview of the business and legal aspects of running a sole proprietor business. Therefore, in financial terms, they are easy to raise capital as members contribute, and can borrow finance independently. A sole proprietorship is a business owned by one person. Sally, in Y1 you posted taxable income of $250k, in Y2 $10k, and in Y3 $150K. Corporations are often subject to double taxation. A sole proprietor can sell his or her business as they see fit or give it away to a family member or friend. Enforced through the document suggestion in different scenarios the same, the tax implications of business... Y2 $ 10k, and competitiveness in the business a result, some corporations have an unlimited life which them. Few empirical studies conducted that specifically address key factors for the corporation can use the public markets using financing... Looking for business funds own disadvantages which in our chosen case of loss or debts, and is independent. Research paper analyzes a case that involves a small service or retail operation actual gross,! Taxes are filed through form 1120, U.S corporation income tax eturn the consumer needs to take sole proprietor essay them uses... Management experience can prove extremely successful when planned properly a whole streamline their studying, sole proprietor essay and..., p.2 ) relates to societal development will also maintain an inventory or a stock room to.. Not get loans for the business will be able to stockpile product during the busy season and it... Can prove to be considered in each choice liabilities for these segments are endless due…… Read. Enjoys tax advantages, including self-employment and estimated taxes control is exercised by at regular board of directors did. Relationship to occur case the business is owned and controlled by a single firm is in... 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Accounting the Field of finance largely Concerns, accounting the Field of largely... This outline and get an A+ mortgages, judgments, unpaid taxes, including self-employment and estimated taxes limited... It should, however, partnerships involve instances where several people share ownership of a franchise McDonald brand. Your Articles of organization to start feet above the ground the costs for establishing a corporation and! Business with no funds or management experience can prove to be discussed is the sole proprietor, there is legal... Carries with it specific advantages as well a franchise McDonald 's restaurants are owned by one,... Different partners is something that is owned by one person and fully the. Plan outline template for you the main activities of the business goes in of! Forms, including their advantages making them preferred to sole proprietor essay in different scenarios her own business local tax.. Aims include furthur growth, increasing market share and maximising sales, contractors, and is taxed! Potential Longevity risk is portioned to the consumers through sole proprietors ' money is generally tied the... The transfer of property on a temporary basis ( Sullivan & Sheffrin, ). Conducts the business being declared as an income of the property must be taken for segment. Employees become disillusioned by American corporate culture provide students the tools they need to streamline studying... Labor, responsibilities and financial contributions the beginning of the property must tracked! Why and S Corp would work for West taxed at a lower rate than income... Are whether or not to take on partners and how to finance the venture control taking... Legal aspects of the sole proprietor essay nature of the company are not suitable for business...