According to the IRS Web Site, A sole proprietor is someone who owns an unincorporated business by himself or herself. However, if you are the sole member of a domestic limited liability company (LLC), you are not a sole proprietor if you elect to treat the LLC as a corporation.
An entrepreneur may opt for the sole proprietorship legal structure because no additional work must be done to start the business. In most cases, there are no legal formalities to forming or dissolving a business. A sole proprietor is not separate from the individual; what the business makes, so does the individual. At the same time, all of the individual’s non-protected assets (e.g homestead or qualified retirement accounts) are at risk. There is not necessarily better control or business administration possible with a sole proprietorship, only increased risks. For example, a single member corporation or limited company still only has one owner, who can make decisions quickly without having to consult others.
Furthermore, in most jurisdictions, a sole proprietorship files simpler tax returns to report its business activity. Typically a sole proprietorship reports its income and deductions on the individual’s personal tax return. In comparison, an identical small business operating as a corporation or partnership would be required to prepare and submit a separate tax return. A sole proprietorship often has the advantage of the least government regulation.
A disadvantage of a sole proprietorship is that as a business becomes successful, the risks accompanying the business tend to grow. To minimize those risks, a sole proprietor has the option of forming a corporation. Here in the United States, a sole proprietor could also form a limited liability company, or LLC, which would give the protection of limited liability but would still be treated as a sole proprietorship for income tax purposes.
1. We can reconcile your bank balances
2. We Also help you Track and categorize revenues and expenses for tax Purposes
3. We will assist you once you have grown to the point where you should change from a sole proprietor to the next level of business.
4. We can track and manage your account receivable for you. MTAAS can keep track of these for you in a very organized and easy to understand manner.
5. If you have many high liability balances such as line of credits and loans, we can assist in keeping track of them for you. That will help you focus primarily on running your business and reap your maximum profit from the time invested in your profit.
6. If you perform work on a project-by-project basis. It’s vital to track revenue and expenses for each job separately – this in turn, you can determine if you are running a profitable project, and which one are more feasible than others. At MTAAS we will help you achieve project profitability.
Call us today at (408) 98 My Tax/(408) 986 9829 or (408) 986 9826 and get answers to your questions. You can also email us at firstname.lastname@example.org or fax us at (408) 986 9831.