Sole Proprietorships-Pros and Cons

July 13th, 2016 at 11:06 AM

The sole proprietorship (SP) is the simplest form of doing business. No tax ID# or Employer Federal ID# is required. All of your income and expenses for your business are reported on Schedule C of your Form 1040 Tax Return-therefore, no extra return is required to be filed for the business.

Two Big Problems with SP

If you are investing in a robust marketing plan to “brand” your company, setting up an entity would be advised to protect your name in the state you’re doing business. Also, the SP is cheap and easy, but could cause some issues to re-brand; the LLC or corporation generally provides more legitimacy. Obviously, if you have a partner or investor, its a given that you should form an entity to operate the business.   

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