Sole Propriatorship Sole Proprietorship Changing Term Paper

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Changing a company organization from a sole proprietorship to a corporation

Advantages

The main advantage of transforming a sole proprietor business into a corporation is because of its liability protection. When a business exists in the form of a corporation, it shifts its responsibilities over debts and liabilities to a more generalized avenue. Corporations, just like LLCs, have a higher chance of welcoming more investors and partners to the business unlike with sole proprietors. Corporations are more secured and flexible to work with unlike sole proprietors. Corporate businesses have more than one owner. In such a case, business activities are done over a wide field through different owners who participate in relaying success to the system that makes up the corporation. Moreover, business corporations offer self-employment tax savings, unlike sole proprietorships. Apart from having a continuous life, corporations are endowed with easy ways of raising money. It becomes easy when transferring interests of a corporate business (Spadaccini, 2007).

Disadvantages

Establishing a business corporation is more expensive than owning a sole proprietor business. This comes in the form of establishment capital and maintenance finances. Corporations have many formalities to be left at hand in order to have a secured continuity. For instance, tax payments for documentation and existence are necessary. Moreover, corporations, unlike sole proprietorship, are liable to unemployment insurance.

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Sole proprietorship is a one way of establishing corporate companies and LLCs. Companies should move from a sole proprietorship to LLCs in order to stand continuity, security, and expansion in the market. It is hard for sole proprietor businesses to be established under single ownership. Therefore, the challenges embraced during transformation are of influence as compared to the benefits accrued when the company has a well established LLC or corporation in the market.

Reference

Term Paper on Sole Propriatorship Sole Proprietorship Changing Assignment

Spadaccini, M. (2007). Business structures. Irvine,…
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"Sole Propriatorship Sole Proprietorship Changing."  Essaytown.com.  January 19, 2013.  Accessed January 16, 2021.
https://www.essaytown.com/subjects/paper/sole-propriatorship-proprietorship/7463551.