Sole Proprietorship vs Corporation
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Starting a sole proprietorship is simple and straight forward with minimum starting cost. On the other hand, incorporating a company has initial accounting and legal cost and would need to complete some paperwork before you start doing business.
Advantages of sole proprietorship: The real advantage of starting a business as sole proprietorship is low cost and no wait time. You can start and stop business any time you like. You will be the boss and responsible for everything.
Disadvantages of sole proprietorship: The main disadvantages are personal liabilities for business work and limited growth opportunities. Also, the net profit will be taxed at gradual personal tax rate which could be very expensive. .
Advantages of a corporate: The main advantage of a corporation is lower tax rate and limited liabilities. A corporation can continue to operate ff stockholders or shareholders leave the company by estate planning. Unlike sole proprietorship, incorporated companies can expand their business easily.
Disadvantages of a corporation: Formalities are much more compared to sole proprietorship. Companies must hold director and shareholders meetings and higher professional cost than sole proprietorship business.
Should you incorporate a company? There are various variables which could influence your decision. We are here to assist. If you have any questions, about starting business as a sole proprietorship or as a corporation, please feel free to contact us.v