Article by Stephen L. Nelson

Preparing to start your own business? You have a bunch of different choices in terms of company type, including the formation of a corporation or limited liability company. But do not make the mistake of over-looking a sole proprietorship. opportunity for new entrepreneurs starting a small business, sole proprietorship offers five big benefits

Reason # 1:. Setup Simplicity

Here’s the first reason to start a new business as a sole trader: .. It’s easy

fact, you do not actually have to do anything to “Start your new business as a sole trader starting your business, you create your sole proprietorship. period.

Note that state and local governments usually seek to license companies, however, including businesses operating as sole traders. Check local phone book or search online to government licensing-related information to start a business like yours

Reason # 2:. Easy Tax Accounting

Easy tax accounting counted as a second reason to use only vendors.

Compared to corporations and companies, sole traders maintain tax accounting simple. sole proprietorship reports its income and deductions of federal and state government with a one-page tax form, Schedule C. Schedule C tax form available from web site essentially a simplified profit and loss account.

Note that very small enterprises, limited liability companies and partnerships must include a balance sheet as part of their tax returns. And the balance significantly complicate accounting and small business tax return

Reason # 3:. The employment of the holder of children

third reason for considering a sole trader option: a sole trader who wants to rent their minor children often saving package for taxes Here’s why:. sole proprietor who employs his young children (under 18 years of age) may deduct amounts paid to children as wage earnings, however, usually not. t taxable children. (The actual rule is that salaries are not taxed until children make less than the standard deduction amount, about 000 a year.)

And it gets even better: These fees do not usually ratchet commencement of business of insurance because the wages of minors are not subject to Social Security, Medicare and Federal unemployment taxes

. Note: A successful sole trader with children, helping in the business can easily save between 000 and 000 a year per child by using this tax loophole

Reason # 4:. easy Self-employed Health Insurance Deductions

fourth reason for using a sole proprietorship for the self-employed health insurance deduction.

sole trader usually can easily use their health insurance as an income tax deduction.

Moreover, with some additional documents in certain situations as a sole trader, using the husband may be able to deduct all medical expenses as a deduction of taxation.

to deduct from the holder of the family medical expenses as a reduction of taxation, the sole proprietor must establish something called a health reimbursement arrangement. (Ask your accountant if you want to do this, the setup process can be quite difficult and draining for the unwary.)

Note: corporations, partnerships and limited liability companies can deduct for self-employed health insurance, too But the deduction is often difficult for small enterprises, limited liability companies and partnerships may be impossible for these species. . persons (You should consult your tax advisor for details.)

Reason # 5: Easy upgrade

a fifth last reason to use only dealer later you can easily switch to a corporation, limited liability company or partnership. Specifically, you can turn a simple sole proprietorship or partnership in a company without tax consequences at some point in the future if circumstances require.

Therefore, if at some point in the future should bring in partners or want to reduce legal liability by forming a partnership or limited liability company, you should be able to easily do so. (Ask your lawyer or accountant for details.)

CPA Stephen L. Nelson is the author of downloading, DIY kits Incorporating in California , Incorporating in Texas and Incorporating in Florida.