lesson#1 Assignment #2

lesson#1 Assignment #2 - liabilities against the owner’s...

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Fred Pearson III BA521-2011 6/13/11 Lesson #1, Assignment #2 Minicase Pg. 18 The McGee Cake Company The McGee Cake Company is currently owned and operated by Doc and Lynn McGee as a sole proprietorship. As requested by ownership this document is designed to outline the advantages and disadvantages of a sole proprietorship against LLC (Limited Liability Corporation) and corporation. The major advantage of a sole proprietorship is it’s simplicity. A sole proprietorship takes little to no effort to open and begin operation. Also, all profits can go directly to the owner. The owners of a corporation or LLC can be “double taxed” because the company can be tax and then the earning passed onto the owner can be taxed as personal income. However, that is the limit to the advantages. The disadvantages of a sole proprietorship revolve around the fiscal liabilities to the owner. As owner of a sole proprietorship any debt accrued by the operation of the business can become the
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Unformatted text preview: liabilities against the owner’s personal assets. In some cases as a Corporation the owner may carry some level of liability against their personal assets, but not to the extend that they carry the liability under a sole proprietorship. In addition, a sole proprietorship ends with the death of the owner and it is also very difficult to transfer ownership of the organization in the event that the owner wishes to sell the company. These disadvantages are all equally true again an LLC and a corporation. It is my recommendation that McGee Cake Company become an LLC. The advantages of selecting an LLC is that the liabilities remain with the company and the company will become much more easily transferred in the event that one of the owners die or decide to sell it. For these reasons McGee Cake Company should become an LLC....
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