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Sole Propriatorship
Sole Proprietorship
Changing a company organization from a sole proprietorship to an LLC
Advantages
By converting to a Limited Liability Company, an organization is entitled to a number of advantages in the form of benefits. The owner of a business is entitled to receive protection of the entire business unlike in the sole proprietorship. The informality of the business structure is kept under check even with this transformation. As a sole proprietor, there are limited liability to debts and obligations. There is a likelihood of losing property in case the business is sued. With LLC, the business has limited personal protection from debts and other challenges. With LLC, there is an open opportunity to raise capital unlike in a sole proprietorship. Continuity is another facet that is required of every business.
When a business or company shifts from being a sole proprietor to an LLC, it attains growth and development parameters needed for continuity. Moreover, other considerations...
For instance, moving from a sole proprietorship to LLC enables a business owner to enjoy fringe benefits that sole proprietors cannot access. For instance, a business will not pay tax on fringe benefits like disability or health insurance. Sole proprietors have a harder time embracing quality employees as compared to those of an LLC. Moreover, LLCs offer ownership interests in businesses as a making of the employee's reimbursement.
Disadvantages
With LLCs, there should be filed documentations within states just before they are established. Annual filings are a requirement of these organizations in order to maintain the secretary of state in awareness of the business activities. This is not common in a sole proprietorship. Every filing requires money while its failure leads the business to incur penalties. Taxes are accrued to LLCs unlike with sole proprietors. The federal tax filing requirements are subject to the existence and…
Reference
Spadaccini, M. (2007). Business structures. Irvine, CA: Entrepreneur Press.
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