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Why a sole proprietor or a partnership would not opt to incorporate as company?

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Question ajoutée par Adam OUMAR ADAM , Peintre En Bâtiment , Personel
Date de publication: 2018/06/23

  • Corporations cost more to set up and run than a sole proprietorship or partnership 
  • Sole proprietorships and partnerships have minimal formalities , A corporation can only be created by filing legal documents with the state. In addition, a corporation must adhere to formalities.
  • On the other hand, a sole proprietorship or partnership can open and operate without any formal organizing or operating procedures - not even a handwritten agreement.
  • Sole proprietors and partners are not liable for unemployment insurance .
  • A shareholder-employee of a corporation is required to pay unemployment insurance taxes on his or her salary, whereas a sole proprietor or partner is no

Ahmed Hussain
par Ahmed Hussain , FINANCE ACCOUNTANT , FIRDOUS CLOTH MILLS

Their liabilities will be unlimited but they will not have to corporate tax, they will just have to pay tax on their own earnings.

yahya bakhtiar
par yahya bakhtiar , Compliance Officer , AKA Management Consultancy L.L.C

There are far more regulations imposed on corporate set up than on partnership firm. Governance requirements are need to be complied by corporate set up which slows down decision making as formal procedures and approval need to be obtained for each individual transaction no matter how small it may be.

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