What’s the most common type of business in the United States? Corporation, LLC, partnership? When you drive down the street you’ll primarily pick out chain stores and restaurants, or the first businesses that come to mind are larger businesses; however, the most common type of business in the United States is in fact the sole proprietorship. Just like any of the other business structures it has positive and negative aspects.
One of the most attractive parts of a sole proprietorship is the ease of setting up the company. Unlike corporations or LLCs there are no articles of incorporation or organization to file, some sole proprietorships will need no licensing or permits, while some will, it is far cheaper to form than other types of businesses. Another advantage of a sole proprietorship is the ultimate control that the owner may exert, as the owner you have full control over the business. Furthermore, sole proprietorships are known as pass through entities in terms of taxation purposes; therefore, the owner will not have to pay tax for personal income and the business separately.
While there are advantages, there are also disadvantages including the unlimited liabilities that can be incurred on behalf of the owner. Creditors and lawsuits can come directly after the business owner’s personal assets instead of being limited to the business’s assets. The risk of liabilities extends to employees acting in the scope of their job for the owner as well.
Weighing the advantages and disadvantages of business structure can be difficult, if you have any questions feel free to contact us at the Center of Financial, Legal & Tax Services, Inc.