Question

Summarize the following issues regarding your business:

-  Explain the legal structure, and give the reason/s that you chose the one that you did.  What are the advantages and disadvantages of this legal form?

-  Do you have any intellectual property with your business?  If yes, how will you protect it?

-  What contracts do you expect your business to have?

-  Is your business required to have any licenses or permits?  If yes, please explain.

-  What taxes must your business pay?

Answer 1

Business: Rocky's Restaurant & Bar

Legal Structure: Sole proprietorship

Reasons for choosing the legal structure:

• Simple and convenient
• Easy taxation
• Easy to form and wind up
• Complete control on business

Advantages of this legal form:

• Cheaper to start as compared to other legal forms
• Tax benefits
• Direct control
• Simple and easy legal formalities

Disadvantages of this legal form:

• Unlimited liability of owner
• Self-employment taxes out of the owner's pockets
• Difficult to raise initial capital

Intellectual property of business: None

Contracts expected for the business:

• Land lease agreement with land owner'
• Furniture lease agreement
• Alcohol supply yearly contract
• Monthly groceries supply agreement
• Hiring housekeeping & secuity staff from a placement agency on contractual basis

What taxes must the business pay?

Since the business is a sole proprietorship, the owner must pay self-employment taxes. The owner can claim the loss and gain of business as a part of his own income tax return filing.