There are a number of alternatives to choose from when developing a business. Some of them include corporations, partnerships, limited liability companies, and your current business type, a sole proprietorship. There are also a number of advantages and disadvantages to each one. I'll be presenting you with a number of the pros and cons of each business, in order to assist you with your decision.
Your current business is run as a sole proprietorship. This is a type of business entity which legally has no separate existence from its owner. This means that any debts of the business are also debts of the owner. From a liability standpoint this would be a disadvantage to having a sole proprietorship. An advantage would be that the owner also receives all profits. This form of business also has it's tax advantages. Accounting and tax returns are a lot simpler. The owner is exempt from double taxation, therefore files a single personal tax form. A sole proprietor is also subject to the least amount of government regulations of all business entities.
When it comes to running this type of company, there are no legal formalities to forming or dissolving your business. However, sole proprietors tend to have a hard time raising capital. This is because there are no shareholders, other investors, or bank finance. The owner is also responsible for their own health insurance, which makes it hard to hire employees. Another disadvantage to the longevity of this type of entity, is that the life span is uncertain. With a sole proprietorship, when the owner dies, the business dies.
The owner of this type of entity has complete control. This makes for quicker decision making without having to consult others. However, this arrangement can cause hesitation am ...