Currently my laundry business is under sole proprietorship. Should I remain as it or should I...
Currently my laundry business is under sole proprietorship. Should I remain as it or should I convert the business into private limited company. What is the pro and cons? Is there any risk after the conversion?
Homework Answers
Depends entirely on your business environment (both internal and external). Sole proprietorships are desired in cases of single person businesses that're fully self-financed and where the owner does not expect the business to grow beyond herself/himself. The pros are that it's less expensive, simple and involves little paperwork & legalities. The con is that you assume all of the liability for your company - and as a sole proprietor your personal assets (house/car etc.) can be seized in case your business fails.
If the business environment is uncertain/risky, or you're looking to expand and/or hire staff etc. then incorporating might be a better choice. This will, undoubtedly, involve huge costs and a lot of paperwork.... but the pluses are many - you get to have limited liability, flexibility with tax payments and income splitting, stability (somewhat).. etc.
Risks post conversion could be that liability may not be as limited as stated. Registering and closing the business may be hard. You may not get personal tax credits. Management may become cumbersome etc.
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Currently my laundry business is under sole proprietorship.
Should I remain as it or should I...
I need some clarification. Most American businesses are this form of business sole proprietorship Limited liability...
I need some clarification.
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