What are the disadvantages of exclusive ownership?

exclusive ownership is one of the simplest types of business structures legally allowed in the United States, yet it has clear disadvantages regarding the rights and obligations of limited liability corporations (LLC), partnership and other more formal trade structures. One of the fundamental disadvantages of exclusive ownership is that all responsibility incurred by the company or its employees is only the responsibility of the owner. This applies to all personal assets such as home, car, personal savings and real estate that could be handed over if the company is sued and the action is lost in court. Protection of liability in terms of business insurance is always recommended for exclusive ownership, but at the same time it is expensive to obtain.

licensed companies as the only ownership also have a relatively vague status in tax law that can be cited tax problems that are difficultejid. The federal government focuses on exclusive ownership in a similar way to someone who holds work and taxes are paid on the basis of the income generated by the company. This may vary significantly depending on whether the company requires net profit or loss and what the owner regularly pays in terms of salary. Discharge on personal taxes and tax groups that the owner claims can therefore be changed by both assets and profits from the company and income that the owner freely selects annually. As a result, compliance with local, state and federal tax laws can be complicated.

Another key aspect of a single ownership, which is traditionally considered to be a weakness of business format, is that such businesses are almost always very small and speculative. Such status can provide a company less than a professional appearance compared to larger established competitors. This is almost impossible for exclusive ownership to gain growth or beginning fundingfrom commercial banks or risk capitalists. If financing is available, it often comes with high interest rates or the requirement that the owner gives up on the inspection interest in an enterprise organizing a loan.

Individuals of self -employed often start exclusive companies of the owner, as their income grows, because the business structure is relatively easy to determine with the minimum legal paper to be processed. This is self -employed against exclusive ownership by being vulnerable if there is conflicts between corporations with lengthy legal protection or governments with complex regulations and tax codes. Agencies such as Internal Revenue Service (IRS) in USAT or losses and deductions through small businesses. Taxes are often estimated and paid quarterly, which can lead to mistakes in filing owners who are not familiar with complicated tax laws.