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Sole Proprietorship Pros And Cons

1021 Words5 Pages

Sole proprietorship Pros: Typically are easy to start-up, and the cost to start a sole proprietorship is $0. In addition, net business loans can be deducted from an individual’s personal taxes. The person who is a sole proprietor gets too control all of the financial activities, and make all the business decisions. To add to that, they are also the management and they’re able to respond to any changes or differences. Cons: Transfer of ownership can present a problem if there’s ever a reason to. Banks are more hesitant to hand out a loan due to turnover rate and creditors may go after personal property to settle a claim. Another is that it’s harder to raise capital on a long basis due to it just being one person. Partnership Pros: There’s …show more content…

Also, it happens to be a separate entity from the partners. Cons: Every partner is responsible for their own negligence, misbehavior, etc. While every partner is responsible for their actions, if someone under them makes a mistake the partner takes the blame for that also. Not to mention, LLP is only available for specific occupations. LLC Pros: Presents the opportunity for an individual to be taxed as a sole proprietor, partnerships, along with S and C Corporation. This type of business entity also has less paperwork along with filing costs. The members are exempt from any liabilities or legal issues the company may experience. The most beneficial may be that owners’ responsibility for any debt is limited despite having control the company Cons: Typically corporations are more expensive to startup compared to sole proprietorship or partnerships. At times an LLC business may find when starting up this type of business their budget is tight leaving them not able to pay themselves wages. Another is that the laws that regulate LLC will vary from state to state. …show more content…

Both gentlemen are wise and have beforehand knowledge in construction to know that it would not be advisable to take upon starting a business of rehabbing as a sole proprietor. Rehabbing requires long hard working hours with attention to details. It sounds as if these guys have the experience to understand that such business would be daunting, time consuming and financially rewarding to start it as partnership for a more promising future on rehabbing homes for investment properties the limited liability tax abatements would great for

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