There is no perfect business structure — each has its own benefits and perils! Let’s take a look at them.
The Perils Of Sole Proprietorships! The pros:
When it comes to various business structures, a sole proprietorship is the least difficult structure, since it doesn't mandate the proprietor to go about setting up another legitimate entity (although you ought to create an imaginary name).
In the case of sole proprietorship companies, the proprietor is responsible for the profits and losses — which need to be accounted for through personal tax returns, using Schedule C. Pretty straightforward, eh?
For expansion, or to purchase new equipment/machinery for business development, in all likelihood, you'll need to open a new line of credit/raise more funding. Which is rather tough as a solitary proprietor!
This structure also opens the proprietor to boundless individual obligation, should any business dangers arise, making it riskier than other structures.
LLCs — Is The Investment Justified?The pros:
To maintain a strategic distance from the boundless obligation issues of managing a sole proprietorship, business owners prefer to set up Limited Risk (Liability) Corporations (LLCs). In this structure, the profits remain with the proprietor, but also work to confine the proprietor's legal risk.
You can have countless members in your LLC, which makes it less demanding, more evened out and allows for easy capital raising initiatives.
Initially, you will have to pay up certain costs for setting up the LLC with your state and thereafter, keeping up the LLC status.
To some, the process of setting up an LLC is perplexing, because you need to choose an assessment status and create a working understanding among all members.
Yoel “Mo” Molina and I am a lifelong resident of Miami, Fl. I am a graduate of Miami Senior High, Class of 1992, Georgia Institute of Technology, B.S. 1997 and University of Maine School of Law, J.D. 2001. I have been practicing law in Miami Since 2001. I am a former training prosecutor in the Miami-Dade State Attorney’s Office. I have experience in jury trials, appeals, and administrative hearings. I have appeared before judges across the State. My experience ranges from civil litigation matters, collection matters, foreclosure, business and corporate, contracts, real estate, leases and employment matters..