O&MM Fabricator - September/October 2017 - 42

SOLE PROPRIETORSHIP
The simplest and least expensive way to
launch a new business is, of course, as a
sole proprietor. This choice requires little or
no legal expense, no complex tax structure,
and no one else to interfere with management decisions.
As a sole proprietor you may operate under
your own name or you may choose a business
name that will be your d.b.a. name (doing business as). Either way, you will need a business
license issued by the municipality or state
in which the business will operate. In most
states, that's your only legal requirement to
begin business as a sole proprietor.
As a sole proprietor, profits flow directly
through your personal tax return (using a separate tax form called Schedule C, Profit or Loss
from a Business). You get to keep or reinvest
all of the after-tax income produced by your
business. If it ever becomes necessary to do
so, a sole proprietorship is the easiest of all
business structures to dissolve.
Still, sole proprietorship has its own set
of disadvantages. As a sole proprietor, you
bear unlimited personal liability for all debts
against the business. Both your business

and personal assets are at risk in the event
of legal trouble.
Other disadvantages include possible difficulty in raising funds from outside sources.
Also, operating as a sole proprietor may make
it more difficult for you to attract high-caliber
employees.
PARTNERSHIP
As far as most legal and tax considerations
are concerned, a partnership is treated
essentially the same as a sole proprietorship.
While the partnership must file an annual
income and expense report on Tax form 1065,
each partner is jointly and separately liable
for the financial and tax obligations incurred
in the name of the business. Each partner is
taxed on their share of the profits generated
by the business.
Keep in mind, however, that business partnerships like domestic partnerships do inject
some challenging personal issues.
The choice of a business partner is fraught
with potential danger. Some experts suggest
that good friends or relatives rarely work out
as business partners because of the inevitable
disagreements over business decisions which
can easily turn into emotional issues. That's
why it's so important in partnerships to have
a clear understanding at the outset of such
issues as:
* Who does what? The specific role of each
partner should be clearly defined and scrupulously honored.
* On what basis will the partners share in
the profits of the business? Will it be 50-50
or will there be some other arrangement?
How will the major financial decisions
be handled? Such issues are extremely
important and should never be left "to be
decided later."
* Also to be considered in the very beginning
is what happens if one partner dies? In such
a case, you may find yourself in business
with your partner's widow or widower. "To
help avoid this, there are two things you
should do," says Geneva Fulbright, CPA,
Durham, N.C. "First, consider purchasing
key-person life insurance. Then, with the
help of your attorney, draw up a written
agreement clearly establishing procedures
for buying out a partner's interest in the
event of death or any other unforeseen
circumstance."
These and other considerations make it
unwise to establish a business partnership

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without a written agreement drawn up with
the help of an experienced attorney.
CORPORATION
A corporation is a separate legal entity that
carries with it the same rights and responsibilities as those conferred upon us humans.
The corporate form of business will limit your
personal financial liability, be more stable in
the event of your death, and will probably make
it easier for you to raise money for expansion
and growth. In the light of harsh reality, however, you should investigate carefully before
you leap.
One problem is the sometimes unrecognized
differences between large, public corporations and the closely-held corporations typical in a small business such as yours. If you
try to swing a loan in the name of your small
corporation, you may find that the lender will
require you to sign personally, making you just
as responsible for the loan as you would be in
a sole proprietorship. Further, in the event of
a lawsuit, you may find yourself as well as the
corporation named as a defendant. So much
for the protection of personal assets.
Will a corporation stand a better chance
of survival than a sole proprietorship or partnership in the case of the death of a principal? Usually, but not always. Many small
businesses survive as a direct result of the
talents of the founder and prime mover and
shaker. Nowhere would this be truer than in
a complex metalworking operation. In such
a case, if the founder dies, the business may
well follow along shortly regardless of the
legal form bestowed upon it.
Finally, any business owner considering
incorporation should be aware that doing business in that form will introduce complications
that can be a nuisance to someone used to
the simple life. Corporations must follow rigid
rules, file separate tax returns, and maintain
specified records. Shareholders must elect
a board of directors and appoint a president.
Even if you form a corporation as the only
shareholder, you must name yourself to the
board of directors and appoint yourself as
president - not a major roadblock to an entrepreneur seeking the advantages of incorporation, but a good indication of the unending
stream of annoying details involved.
If you are a sole proprietor considering incorporation, you may have considered using one of those companies that
allow you to incorporate over the Internet,


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Table of Contents for the Digital Edition of O&MM Fabricator - September/October 2017

President’s Letter
Letter From the Executive Director
NOMMA Network
NOMMA Education Foundation
Apprenticeships: Getting Involved With Worker Training
The Collective Mind Gate Series–Part V
Shining Light: How to Work With Illuminated Handrails
Sole Proprietorship or Corporation?
Employment Lawsuits Happen
Supplier Members
New & Returning NOMMA Members & Iron Club Members
Gold Members
Landscape Architect to Blacksmith to Soon-to-Be Preacher
Index of Advertisers
O&MM Fabricator - September/October 2017 - Intro
O&MM Fabricator - September/October 2017 - cover1
O&MM Fabricator - September/October 2017 - cover2
O&MM Fabricator - September/October 2017 - 3
O&MM Fabricator - September/October 2017 - 4
O&MM Fabricator - September/October 2017 - 5
O&MM Fabricator - September/October 2017 - 6
O&MM Fabricator - September/October 2017 - 7
O&MM Fabricator - September/October 2017 - 8
O&MM Fabricator - September/October 2017 - President’s Letter
O&MM Fabricator - September/October 2017 - 10
O&MM Fabricator - September/October 2017 - Letter From the Executive Director
O&MM Fabricator - September/October 2017 - NOMMA Network
O&MM Fabricator - September/October 2017 - 13
O&MM Fabricator - September/October 2017 - NOMMA Education Foundation
O&MM Fabricator - September/October 2017 - 15
O&MM Fabricator - September/October 2017 - 16
O&MM Fabricator - September/October 2017 - 17
O&MM Fabricator - September/October 2017 - 18
O&MM Fabricator - September/October 2017 - 19
O&MM Fabricator - September/October 2017 - Apprenticeships: Getting Involved With Worker Training
O&MM Fabricator - September/October 2017 - 21
O&MM Fabricator - September/October 2017 - 22
O&MM Fabricator - September/October 2017 - 23
O&MM Fabricator - September/October 2017 - 24
O&MM Fabricator - September/October 2017 - 25
O&MM Fabricator - September/October 2017 - 26
O&MM Fabricator - September/October 2017 - 27
O&MM Fabricator - September/October 2017 - 28
O&MM Fabricator - September/October 2017 - 29
O&MM Fabricator - September/October 2017 - The Collective Mind Gate Series–Part V
O&MM Fabricator - September/October 2017 - 31
O&MM Fabricator - September/October 2017 - 32
O&MM Fabricator - September/October 2017 - 33
O&MM Fabricator - September/October 2017 - Shining Light: How to Work With Illuminated Handrails
O&MM Fabricator - September/October 2017 - 35
O&MM Fabricator - September/October 2017 - 36
O&MM Fabricator - September/October 2017 - 37
O&MM Fabricator - September/October 2017 - 38
O&MM Fabricator - September/October 2017 - 39
O&MM Fabricator - September/October 2017 - 40
O&MM Fabricator - September/October 2017 - Sole Proprietorship or Corporation?
O&MM Fabricator - September/October 2017 - 42
O&MM Fabricator - September/October 2017 - 43
O&MM Fabricator - September/October 2017 - Employment Lawsuits Happen
O&MM Fabricator - September/October 2017 - 45
O&MM Fabricator - September/October 2017 - 46
O&MM Fabricator - September/October 2017 - Supplier Members
O&MM Fabricator - September/October 2017 - 48
O&MM Fabricator - September/October 2017 - New & Returning NOMMA Members & Iron Club Members
O&MM Fabricator - September/October 2017 - 50
O&MM Fabricator - September/October 2017 - Gold Members
O&MM Fabricator - September/October 2017 - Landscape Architect to Blacksmith to Soon-to-Be Preacher
O&MM Fabricator - September/October 2017 - Index of Advertisers
O&MM Fabricator - September/October 2017 - 54
O&MM Fabricator - September/October 2017 - cover3
O&MM Fabricator - September/October 2017 - cover4
https://www.nxtbook.com/naylor/NOMS/NOMS0518
https://www.nxtbook.com/naylor/NOMS/NOMS0418
https://www.nxtbook.com/naylor/NOMS/NOMS0318
https://www.nxtbook.com/naylor/NOMS/NOMS0218
https://www.nxtbook.com/naylor/NOMS/NOMS0118
https://www.nxtbook.com/naylor/NOMS/NOMS0617
https://www.nxtbook.com/naylor/NOMS/NOMS0517
https://www.nxtbook.com/naylor/NOMS/NOMS0417
https://www.nxtbook.com/naylor/NOMS/NOMS0317
https://www.nxtbook.com/naylor/NOMS/NOMS0217
https://www.nxtbook.com/naylor/NOMS/NOMS0117
https://www.nxtbook.com/naylor/NOMS/NOMS0616
https://www.nxtbook.com/naylor/NOMS/NOMS0516
https://www.nxtbook.com/naylor/NOMS/NOMS0416
https://www.nxtbook.com/naylor/NOMS/NOMS0316
https://www.nxtbook.com/naylor/NOMS/NOMS0216
https://www.nxtbook.com/naylor/NOMS/NOMS0116
https://www.nxtbook.com/naylor/NOMS/NOMS0615
https://www.nxtbook.com/naylor/NOMS/NOMS0515
https://www.nxtbookmedia.com