Question

What are the advantages and disadvantages of each of the following business form: (1) sole proprietorship, (2) partnership and (3) a corporation.

Also, can you tell me specifically what your state requires to incorporate a business in that state? Please provide a link to the state information.

Answer 1

ADVANTAGES OF SOLE PROPRIETARSHIP

1.Beginning a sole proprietorship is easy .Starting a sole proprietorship requires less paperwork and time to create a legal sole proprietorship.

2.It is cheap to start a sole proprietorship

3.Some tax benefit for a sole proprietorship

4.Owners have complete and direct control over all decision making

5.Sole proprietor can employ others and grow their business .

DISADANTAGES

1.Owners are fully liable

2.Self-employment taxes apply to sole proprietorship

3.Raising capital is difficult

4.Business continuity ends with the death of the owner .

2.PARTNERSHIP ADVANTAGES

1.Less formal with fewer legal obligation .

2.Easy to get started

3.Sharing the burden

4.Access to knowledge ,skills, experience and contacts

5.Privacy

6.Better decision making

7.Ownership and control are combined

8.More partners more capital

9.Prospective partners

10.Easy access to profit

DISADVANTAGES

1.The business has no independent legal status

2.Unlimited liability

3.Perceived lack of prestige

4.Limited access to capital

5.Potential for differences and conflict

6.Profit must be shared

7.Taxation

8.Limits on business development

ADVANTAGES OF A CORPORATION

1.Limited liability

2.Easy availability of capital

3.Corporations have perpetual existence

4.Easy transfer of ownership

5.Builds credibility

DISADVANTAGES

1.Complex process

2.Double tax

3.Conflict of interests

4.Corporations lack business confidentiality

Our states requires following documents to incorporate a business

Memorandum of association and Articles of association with ROC along with Form 1 (declaration),Form 32 (details of directors ) and Form 18 (Details of registered office of the company ). After submitting the above documents busimess will be registered and the certificate of incorporation will be issued by the Registrar .