Business Law and Communications LIT1, Assignment 1
Your business is now currently operating as a Sole proprietorship. You and your business are one. Any income the business receives and expenses paid will flow in and out from you personally and will be reported as a Schedule C on your personal income taxes. As a sole proprietor you carry full responsibility and are 100% liable for the company. This means any debts you owe from your business if there are not adequate funds available from the business account, legally you are personally held responsible and your personal assets are at risk. As a sole proprietor you have total control of your business and all business decisions, your company starts the day you choose and can dissolve the day you choose as well. If you desire to have a business name that is different from your name you can easily register for a doing business as also known as “dba” license with the local court.
The convenience – this has been a simple and convenient way to run your business in the beginning stages. There was not much more you had to do other than simply run your business and report your end of year total income and expenses.
Liability – Total liability of the company is on you as the owner. Legally you are held responsible for all expenses the business incurs if you are unable to pay they can come after your personal assets.
Income Tax – You will be required to file an additional schedule on your taxes “Schedule C” where all profits and losses of the business are reported. Your accountant my charge you an additional fee each year to file this form.
Longevity – As a sole proprietor the company last along as the owner desires or until he/she passes away.
Control – As the sole owner you have 100% control of the company and all business decisions.
Profit Retention – 100% Profit goes to the owner. You can decide if you would like to