Question

State which form you would most likely choose for your own business based on the level of risk aversion, experience, financial situation and tax considerations. Explain your decision.

Answer 1

In the industry, one has an option of opening different business forms. Considering all the options, the form I would like to choose for my own business would be Sole Propriteorship. Reasons for choosing the same business form are as follows:

1.Sole Propritorship is considered to be the simplest form of business entity. It is easy to set up and requires very little paperwork since you don't have any partners or any executive boards to deal with. You can easily start your business with any idea and is a good thing to go on for young minds like us.

2. Although you have risk as both profits as well as loss would be shared by you only, generally but the cost of maintaining this business vary with the state you are living and having the business in. The only fees is the license fees and the taxes associated.

3. Since for the government you and your business are one single entity, you'll get many business tax deductions and benefits like the health insurance etc for work.

4. Easy exit: Forming and leaving the same business is easy. You have the right amount of control within your hands and no control or authority is being diluted. You can anytime quit the business if you want or you are seeing it isn't profitable. For example if you start a daycare centre, you can easily quit it by refraining your operations and providing services.