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Chapter35SolePropietorshipsAndFranchises

Chapter35SolePropietorshipsAndFranchises - C hapter 35 Sole...

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Chapter 35: Sole Proprietorships and Franchises Entrepreneurs – one who initiates and assumes the financial risk of new enterprise (entity selection) I. Sole Proprietorship – simplest format a. Advantages i. In business for yourself 1. You own the entire business and receive all the profits ii. Business license – no other reports or paperwork 1. Easier and less costly than starting any other kind of business iii. More flexibility than a partnership or corporation 1. Complete decision making power by owner iv. Taxes – income flows to personal income 1. Pays only personal income taxes like SS and Medicare on business’s profits v. Charles Miller d/b/a Chez Charles b. Disadvantages i. Sole owner – personal risk of all $ losses ii. Limited sources of investment funding iii. Some owners assume liability risks 1. Ex: Garden city Boxing Club vs Dominguez a. Employee of Antennas Enterprises to a business which was not allowed because GCB had the rights to it. Luis Dominguez , the
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sole proprietorship of Antennas Enterprises, had a suit filed against him even though the employee made the mistake b. GCB won and Dominguez had to pay damages and attorney fees to GCB c. Liability was created by agency relationship between employer- employee iv.
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