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A-Cut-Above Lawn Maintenance and Landscaping is a sole proprietorship
form of business that is under the ownership of John White. The business
has no stock since it is not incorporated. The A-Cut-Above Lawn
Maintenance and Landscaping became registered fort business operations
in September 2013 and is based in Houston, Texas. The sole
proprietorship business has to plan for risks that can affect the
business (Malecki, 1992). For instance, because of the nature of the
business, employees may experience some injuries which the business has
to compensate for. Besides, the business requires having liability
coverage in order to cover errors and omissions that may occur or even
cases of employee misconduct. Therefore, John White will require to have
an adequate insurance coverage. The insurance coverage should be
affordable to John White. An unaffordable insurance coverage will have
the effect of increasing operating costs, which is likely to lead to the
closure of the business.
Besides, in planning for risks in the business, John White will require
to factor in the amount of tax payable and its implications for the
business. Since the business is a sole proprietorship, the business will
not be taxed separately from its owner (Cowan, 2005). The business owner
will be required to report all the income or losses of the business on
his personal income tax return (Cowan, 2005). Therefore, the profits of
the business will pass from the business to the owner for personal tax
return. This will imply that the sole proprietorship business will not
be capable of cutting its tax bill since every income or loss will have
to pass to John White for personal income tax return. This is different
from a corporation since a corporation will be treated as a separate
entity while submitting taxes (Seidman, 1950).
References
Cowan, N. (2005). Risk analysis and evaluation. Canterbury, UK:
Institute of Financial Services, School of Finance.
Malecki, D. S. (1992). Risk management: When sole proprietor decides to
incorporate be sure to consider coverage continuity. Rough Notes,
135(8), 36.
Seidman, J. S. (1950). A comparison of tax advantages of a corporation
v. partnership or sole proprietorship. Journal of Accountancy
(Pre-1986), 90(000002), 104.
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