Forming a Sole Proprietorship: Pros and cons
The basics
Many first time business owners begin their journey with a sole proprietorship. This is because there is no formal filing process. The government simply considers your business to be a sole proprietorship until you file to organize under a more formal structure. A sole proprietorship is automatically formed as soon as you take in your first dollar.
Pros
Ease of formation
As mentioned above, there is no formal filing procedure to establish a sole proprietorship.
No additional tax filings
There is no separation between the finances of a sole proprietorship and its owner. As a result, all of the company’s income is reflected only on the personal tax returns of the owner.
Lack of continuing paperwork
There is no administrative paperwork required to maintain a sole proprietorship.
Lack of compliance requirements
Sole proprietorships are typically free from all of the ongoing compliance requirements placed on other business structures.
Cons
Self-employment taxes
Even though dealing with your business’s taxes on your personal tax return may sound simple, it isn’t completely fool-proof. There are many tax obligations that self-employed business owners are responsible for.
Personal asset protection
Should your business not succeed, your personal assets may be seized in order to satisfy your business’s debts. The more formal business structures offer separation, and therefore protection for your personal assets.
Business reputation
Since the bar for forming a sole proprietorship is so low, some investors, partners, or clients may question the legitimacy of your business.
Swyft can help!
Do you have questions about sole proprietorships? The experienced agents at Swyft are here to assist you. Contact us today!
Frequently Asked Questions
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You can form a corporation or LLC with our help for as little as $0, plus state filing fees for incorporation. Filing fees vary depending on the state you incorporate in. For more information on specific states, check out our state guides on the Swyft Resource Center. You can also email us with specific questions or contact us at 877-777-0450.
Swyft Filings accepts payment through Visa, MasterCard, American Express, PayPal, checks, and money orders. You can send any questions about payment to our email address or contact us at 877-777-0450.
It depends on what you ordered. If all you did was file your corporation or LLC, the price you paid when ordering is all you pay. You will have no further fees after that.
However, if you signed up for the Swyft Filings Registered Agent Service, you will be charged its initial fee three days after you place your order. From then on, you will be charged according to the terms of your subscription until you change your registered agent with the state or dissolve your company. If you change your agent or dissolve your company on your own, let us know so we can discontinue billing.
Other potential subscription-based options include SnapMailbox, 360 Legal Forms, and ComplianceGuard. If you opt for SnapMailbox or 360 Legal Forms, you will be charged a monthly fee after their respective 30-day free trials end. ComplianceGuard has an annual fee after a 14-day free trial. All three of these services are completely optional.
Our team processes all Standard orders on a first come, first served basis. If you opt for Express or Same-Day Processing, we prioritize your order and send it to the front of the line. However, no matter how fast we get it out the door, you’ll still have to wait for your state to address your filing.
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