Partnerships, corporations and limited liability companies all have advantages and disadvantages. If you would like to learn more, contact a business and corporate attorney.
Appropriate entity selection is essential for your Kentucky business formation.
Louisville business lawyer Joseph A. Moloney's skills and experience — more than 25 years — can help you decide whether you are dealing with an LLC, LLP or general partnership.
Contact him today for the sound advice and one-on-one service you need. Your initial consultation is free.
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If you are in need of useful business organizations legal advice in Louisville or Lexington, trust one of your own. Skilled attorney Joseph A. Moloney can help.
Arrange your free consultation by calling 888-863-5531. Your toll-free phone or e-mail messages are always promptly returned.
Are you in the process of forming a corporation in Kentucky? Do you need legal assistance to determine your new company's size, business model and focus?
Contact Joseph A. Moloney, Attorney at Law in Louisville. He is dedicated to your business success. Call 888-863-5531.
Sole Proprietorships
A sole proprietorship is an unincorporated business owned by one person. It is a popular business structure because it is simple, easy to form and operate and subject to few rules and regulations. Unlike limited liability companies (LLC) and corporations, no paperwork must be filed with the government in order to create a sole proprietorship. In a sole proprietorship, the owner has complete control over the management of the business and retains all profits of the business. If you are planning on opening a business and are considering a sole proprietorship, talk to an attorney at Joseph A. Moloney in Louisville, Kentucky who can advise you of the advantages and disadvantages of this type of structure.
While the sole proprietor has total control over the business, he or she can hire employees and enter into agreements with landlords or lenders. A sole proprietorship can be operated, in some circumstances, by a husband and wife combination. The line between a sole proprietorship and a partnership tends to merge in those situations, though. It is important to involve an attorney in such situations to identify any potential problems that could arise from a family business scenario.
Sole proprietorships are often operated in the name of the owner. If the owner's name is not used, then the owner may be required to file a "fictitious name" certificate with the appropriate state authority. Many states also do not allow businesses to use the terms "Inc.," "Co." or other incorporated terms of art unless the business is, in fact, incorporated.
A sole proprietorship ends upon the death or withdrawal of the proprietor or if the proprietor sells the business's assets to another party. When sole proprietorships begin to grow, they can incorporate or convert the business to an LLC. This is mostly to avoid personal liability and to take advantage of the various tax breaks that the government provides.
In a sole proprietorship, the business and the owner are legally inseparable, meaning that the owner reports the income or losses of the business on his or her personal tax returns. More importantly, this also means that the owner is personally liable to any potential creditors of the business. Likewise, creditors can seize assets of the business to satisfy any claims that they may have against the owner personally. A sole proprietorship does not afford the owner the same protections from liability that a LLC and corporation can provide.
The advantages of a sole proprietorship include:
- Ease of formation and operation
- Can deduct business losses on personal tax returns
- Has no double taxation like some other business structures
- Owner has total control of the business
The main disadvantages of a sole proprietorship include:
- Unlimited personal liability
- Can only have one owner
- Upon the death of the owner, the business legally ceases to exist
Conclusion
Sole proprietorships are a popular means of conducting business, but they are not without risks. If you are considering opening a business, an attorney at Joseph A. Moloney in Louisville, Kentucky can help make sure that you are on the right track.
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