1. Introduction to Accounting Preparing for a User’s Perspective
What are the common forms of business ownership structure in the United States and what are some advantages and disadvantages of each?
Debits and Credits Trainer
Sole Proprietorships
By Kevin C. Kimball, CPA
with support from
Free Jan. 2014
Available on the Google Play Store

3. Sole Decision Authority
And I am the 1.
That would be me.
And what I say rules!
Who is the proprietor of this business?

4. Easy Set-up

5. Stop!! You need a license to do business here.
Minimal Regulations
Stop!! You need a license to do business here.
Sales Taxes $
Excise Taxes $

6. employees = more taxes & regulations
Minimal Regulations
employees = more taxes & regulations
830 Punchbowl St.
< 1 hour

7. SEC? No! No law requires me to report to them.
IRS? Yes! Tax law requires me to report to them.
Creditors? Yes! My contract requires me to report to them.
Turn in your financials!!
Turn in your financials!!
Turn in your financials!!
Elisse B. Walter SEC Chairman since 2012
Creditors & others with contracts
Internal Revenue Service

8. Double taxation Single Taxation Corporate Tax Return
Corporations
Sole proprietorships
Double taxation
Single Taxation
OK, I’ll report and pay taxes ONCE but that’s it!
Corporate Tax Return
Net income before taxes
$100
N/A for sole proprietors
Corporate taxes
(40)
Net income after Corp. taxes
$ 60
Difference
Individual’s Tax Returns
Individual’s Tax Return
Dividend income
$ 60
Net income before taxes
$100
Individual taxes
(12)
Individual taxes
(40)
Net income after Indiv. taxes
$ 48
Net income after Indiv. taxes
$ 60
$ 12

9. Single Taxation Net Income $100 Reported to Capital Distributions $100
Sole proprietor to be taxed on personal return.
Net Income $100
Reported to
Are NOT taxed
Capital Distributions $100
Assets = Liabilities + Equity

10. Limited Access to Expertise
KEY business decision?
I have final word.

11. Limited Access to Expertise
I could use a little more expertise.

12. Limited Access to Capital
I just need another $1,000 for a few hotels.

13. Unlimited Legal Liability
Now that’s better.
You owe me!!!
Lawsuit against ALL assets.

14. Limited Life Difficult Transfer of Ownership
Life of Sole Proprietorship ends when

15. Limited Life Difficult Transfer of Ownership
CAN
Take over my assets and liabilities.
Take over my sole proprietorship.

16. Introduction to Accounting Preparing for a User’s Perspective
What are the common forms of business ownership structure in the United States and what are some advantages and disadvantages of each?
Debits and Credits Trainer
Sole Proprietorships
By Kevin C. Kimball, CPA
with support from
Free Jan. 2014
Available on the Google Play Store