Sole Trader: What Form Should Your Business Take?

Posted by HeatherStone under Legal
From http://www.flyingsolo.com.au 4227 days ago
Made Hot by: ObjectOriented on April 29, 2013 11:03 pm

What form should your small business take? The options open to you are varied depending upon the company in which you reside. As Michael Quinn, an accountant and attorney, explains the advantages and disadvantages of running your business as a sole trader in Australia. The arrangement would be roughly analogous to being a sole proprietor here in the U.S. Is this option the right for for your business?

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Comments

Written by HeatherStone
4227 days ago

Hi Martin,

Two problems with sole proprietorship here in the U.S. (as elsewhere I'm sure) are taxes and liability. I'm not an attorney so this is based on my limited knowledge of how businesses here are set up based on asking a lot of questions. First, if you are essentially self-employed in the U.S., you face double the level of unemployment tax as everyone else because you end up paying your own personal unemployment tax plus essentially the company's half of unemployment. That's the part your employer would be responsible for, if you had one. However, since you work for yourself, my limited research suggests it is very difficult for you to ever collect the unemployment you are paying in, because, essentially, if you're self employed, you can't really lay yourself off, no matter how bad business gets. Some of these issues can be resolved by incorporating (for example forming an LLC.) This kind of incorporation can also be important for liability purposes to prevent someone from attaching personal assets in a suit against your business. Again, I'm no attorney, so anyone reading this would need to double check everything I'm saying with a qualified expert, but it does seem to make the idea of being a sole proprietor, in a strictest sense, a bit tricky.

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Written by lyceum
4227 days ago

Heather: Yes, I agree with these concerns. The Business Employment form solves these issues in a way. The LLC form is not available in Sweden as I know it, but you could form a sort of "light" limited company called "economical association" and then you are safer regarding personal liabilities.

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Written by lyceum
4227 days ago

I like the name of the blog, Flying Solo. It has a nice ring to it! :) I have a site called EGO Sole Trader, so I am informed about the business entity sole trader (sole proprietorship in the U.S). One form that I think will become more popular in the future is "Business Employment." It is sort of being your own sole trader, but getting paid via a service that takes a cut of your work that you are invoicing for sending out the invoice, taking care of the book keeping, paying an insurance, etc.

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