Analyzing the pros and cons of sole proprietorships

When the opportunity arises to start your own business in Gainesville, the question of which business model to follow immediately arises. Many in your same situation come to us here at The Roberts Law Firm, P.C. thinking that having business partners automatically gives them an advantage. Like them, you may be surprised to hear that is not always the best move. It all depends on what you want. 

The opposite of a business partnership is a sole proprietorship. The website defines this as a business entity over which you have sole control over its operations and are solely responsible for all of its liabilities. There are certainly pros and cons to deciding you should form your business as a sole proprietorship. It is vital that you analyze these before beginning your venture. 

The first and most obvious advantage of being a sole proprietor is that you maintain total control of your company. You do not have to answer to any partners, investors or shareholders (only your customers). A sole proprietorship is also relatively easy to manage; you only formally need to register your business via a DBA if you are not using your own name as that of your business (companies that incorporate are held to much higher administrative standards). Plus, given that there is no separation between you and your business, you can report all of business income and expenses on your personal tax return. 

You should also be aware, however, of the drawbacks inherent with sole proprietorships. These include: 

  • Being held personally responsible for all of your business' debts
  • Exposing your personal assets to liability issues that may arise from your business
  • Being unable to build a business credit profile

You can discover what your best business formation strategy may be by continuing to explore our site. 

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Gainesville, GA 30501

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