Why You Should Not Trade as A Sole proprietor |
Posted: July 17, 2019 |
When it comes to setting up your business, one of the easiest methods which you can use it to set up as a sole proprietor. However, easy is not always best, and being a sole proprietor comes with a number of drawbacks. A good alternative to being a sole proprietor is to instead set up your business as a limited liability company LLC with the use of a skilled and qualified Texas LLC Formation service provider. It is almost undeniable to say that setting up your small business as a sole proprietor is one of the most affordable and easy ways of starting out in the business world, but being a sole proprietor does come with its risks instead. Understanding these risks will allow a business owner to choose the right style of business for their needs.
What Is A Sole Proprietor A sole proprietor is as it says on the tin; an individual who worked on their own. Additionally, it should be noted that a sole proprietor is, by law, recognized as being the same legal entity as the business itself and this means that a sole proprietor is said to have unlimited liability.
What Are The Benefits Of Trading As A Sole Proprietor Trading as a sole proprietor can be highly beneficial for an individual who is trying to offer a service—such as a writer or small, unique shop. Starting out a sole proprietor is far easier than any of the other options and can be completed much quicker, too, meaning you can start trading ASAP! Additionally, it should be noted that the process of filing taxes is undeniably the most straight forward and easiest when you are trading as a sole proprietor and you will likely find that you will be less heavily monitored and regulated than a chain might be.
Disadvantages Of Trading As A Sole Proprietor While it is cheap and easy to set up a business as a sole proprietor, it is also important that you note the importance of being a legally seperate entity from your business. As a sole proprietor, you alone are responsible for every claim made against you and you will likely find that your own, personal assets get seized as part of the ‘paymetnt process. Moreover, the lack of financial control and outside investors makes it highly likely that raising startup funds might be challenging.
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