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As we mentioned in the previous article, sole proprietor is responsible for every aspect of their business and they may hire others to carry out these duty.
I. Set up and continuation is uncomplicated.
1. Register a name for the company and renew it as required by law and obtain necessary licenses.
2. A sole proprietor keeps all the gains and is responsible for all the losses.
3. Company incomes are treat as personal income therefore sole proprietorship only pay personal taxes.
4. They also have the power of the right to borrow funds for operating capital or estate settlement needs.
5. The power to change the form of business.
6. Their personal saving bank account is the business capital account.
7. Pay and deduct wages to family members who are usually taxed at a lower rate than the owner.
8. All their personal and business assets are subject to claims of creditors.
9.All loan financing are limited to personal and business assets available as collateral.
10. The business ceases at the death or the owner.
II. If the owner wishes the business to continue, they should:
a) stipulate in the will that the executors and trustees are not responsible for the deceased’s prior business debts as well as subsequent business debts incurred while carrying out their duties.
b) the will should state how the business is to be disposed of.
c) the executors should execute the buy-sell agreement, if one exists.
We will discuss how buy-sell agreement with life insurance works and why it is the best solution for sole proprietorship and theirs employees after the death of the owner.
I hope that this information will help you to understand the advantage and dis- advantage of sole proprietorship. If you need more information, please visit my website at
4 comments:
Nice
Thanks for sharing all the pros and cons but I have query. If the owner wants to add one partner then what changes are required in the existing insurance polices. Will the existing policy cover the new owner or one more has to be purchased ?
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