Consequences Of Sole Proprietorship

1059 Words 5 Pages
When people set out to start a company, they do not realize that one of the biggest decisions that they will have to make is the one of the first, assuming that the product has been chosen. Not selecting the best type of ownership can have consequences for the owner as well as for the business itself. The types of ownership will change the cost the ease in which the company is set up, how liable the owners are, what happens when there is a death or withdrawal of an owner, the environment of management control, the ease of raising more capital and the income tax related with the businesses earnings/losses. The simplest form of ownership is the Sole Proprietorship (SP), it is an unincorporated business operated by the owner in their single ability. There are some cases where the SP has other employees. The major advantage of a SP is the fact that is so simple to set up. …show more content…
Being corporation there are a few things that come on the easier side like raising Money and transferring Ownership. With the ease of transferring ownership, a corporation can have uninterrupted Life. Larger corporations typically have high payroll and better resources and can seek out focused and better Management.
With all the great advantages there come disadvantages, A corporation is very difficult to get started and the most expensive. When starting and running a corporation there is a lot of government Regulation and more Paperwork. Large corporations bring stress from all different areas, allowing Conflict within the Corporation. Corporations are doubles taxed, through profits and Stocks Corporation is essentially taxed twice. Because corporation are regulated to inform various government agencies and their stock holders there is no confidentiality, allowing other companies to look deep into

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