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Disadvantages of a Sole Proprietor

Here are a few disadvantages of the sole proprietorship structure: 1. Sole proprietors are personally liable for all debts and obligations of the business. As a sole proprietor, your home, furniture, and personal belongings are all at risk to satisfy liabilities that might arise in connection with your business. 2. Related to #1, a sole proprietor’s business assets are at risk for personal debts and obligations of the sole proprietor. 3. Some tax experts suggest that IRS audit rates for sole proprietorships are higher than for other types of business structures. 4. Corporations and LLCs convey a greater sense of business sophistication and professionalism. 5. Because corporations and LLCs offer perpetual life, those businesses are arguably more marketable than sole proprietorships, which cease to exist upon the death of the owner. For more information, contact an Inc Authority Business Startup Specialist today at 1-877-462-6366.