Las Vegas NV (PRWEB) April 11, 2007
According to a recently published article in the New York Daily News "Putting a Biz on the Books" Many small business owners are operating as sole proprietors unaware of the potential risk this may pose. The article dispelled the popular myth that because a sole proprietorship is the simplest form of business ownership, is the best way to start out, but as the article points out that assumption could end up costing the business owner everything they have worked for.
As stated in the article there's no protection if you're a sole proprietor, and in fact sole proprietorships are the most dangerous and disadvantageous type of business structure, and every year more unfortunate sole proprietors learn this the hard way, as they put everything the own on the line. Executive Solutions, Inc. a Nevada business advisory group offers help to small business owners needing to learn the facts about the different types of business structure, and which one would be the most advantageous for their business.
"It is very important to understand that a Sole Proprietorship is a form of business that is not separate from the individual," said Greg Villegas Vice President of Executive Solutions. "If a business owner does not put forth the effort or taken the time to set up another business type, then the business venture is by default going to be classified as a sole proprietorship."
While it is true the sole proprietorship is the simplest and easiest form of business to run, the disadvantages are many. As a sole proprietor the business owner's personal assets are indistinguishable from the business' assets, and are therefore at risk for the business' incurred liabilities.
In the eyes of the law the universal rule is that the sole proprietor is personally responsible for the activities of the business. This means that the sole proprietor is personally liable for all debts and claims against a business and, if a lawsuit is brought against a sole proprietorship, the suit will also be brought against the sole proprietor individually and not just against the business enterprise. In this scenario, if the business fails to pay suppliers, banks, or other business bills, the owner is personally liable for the unpaid debts.
So although a sole proprietorship is simple, it can also be an extremely dangerous way to operate, especially if the work the business does might result in heavy debts or liabilities from lawsuits, and since the United States is home to over 90% of the worlds lawyers, it is safe to say that this is a large and mostly unnecessary risk. In the case of lawsuit the owner's personal assets, such as a home, cars, and bank accounts, are fair game for the repayment of any awarded judgments.
From a tax perspective, because the owner is self-employed, he or she must pay an increased amount of self-employment (FICA) tax based upon these profits -- about twice as much as an incorporated business or corporate employee would personally pay, yet another reason to look for a better way to do business.
As you can see being a sole proprietor can present a real danger to an owners business and personal finances, but Executive solutions, Inc. can can help business owners find a better way to do business, as Nevada's leading business advisory group, having formed more than 7500 entities over the past 5 years executive solutions can help you choose a more advantageous business structure for business owners, investors and 1099 employees. To receive a free 30 consultation with one of executive solutions professional business advisors call 1-877-939-CORP.
About Executive Solutions, Inc.
Executive Solutions is dedicated to helping people achieve Asset Protection, Tax Reduction, Business Incorporation Services and Financial Privacy with proven strategies. To learn more about Executive Solutions, Inc. call 1-877-939-CORP or visit us on the web at http://www.executiveworldwide.com