What Are The Tax Disadvantages Of A Sole Proprietorship?

Only one owner can be involved in the business. If two or more people want to operate a business, a different type of entity will be needed. Changes in the business can be more difficult. Sale of the business to another person or entity is more complicated than the sale of stock in a corporation and can result in at least some ordinary income (sale of stock normally results in capital gain taxes, which are usually lower). Also, mergers with and acquisitions of other businesses are more difficult.

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