Sole Proprietors and Corporations
Have you noticed? Small businesses have been populating the business landscape in clusters? They represent all industries, sizes, and varieties. Some make it a few months and others are in it for the long haul.
Where Did They Come From?
The US has always been ripe for entrepreneurism. But the economic downturn earlier this century, coupled with impacts made by technological breakthroughs, made self-employment attractive to recently unemployed people seeking an income. In some cases, it was also a necessity.
The job market was flooded with scores, and even hundreds, of people vying for the same jobs.
For example, during the first years of the economic crash, a popular California restaurant chain announced they were hiring for a new location. Because the restaurant wasn’t yet built, they took applications from a ballroom at a local hotel. By the end of a single day, over 3,000 unemployed applicants turned out.
“How do you choose?” asked the corporate exec in charge. “We’re hiring for minimum wage jobs and standing right there with the high school kids were unemployed moms and dads with masters degrees hoping to feed their families.”
This was only one of hundreds (probably more like thousands) of similar scenarios playing out all over the country. Some of the unemployed invested in themselves after losing jobs they’d held for decades. They saw opportunities and went for it full-on.
Fast forward to today. A number of new entrepreneurs are business-savvy. They understand the difference between running their businesses as sole proprietorships or corporations. And they are aware of the benefits of each structure.
Others, well, they don’t have a clue.
They have a great business idea and then jump right in without knowing how to start a business—let alone run one. Some never make it through their first year.
One thing is for sure. The present climate is right for self-employment and small business. The shifts and changes that kicked our behinds a decade go also left holes to fill. Entrepreneurs willing to make their visions a reality are filling those gaps.
How long will this last? Many speculate, but no one really knows. Change happens so fast these days. There’s no way to accurately predict what’s around the corner when you can hardly see half way down the street. Expanding technology and other factors are also sure to have an impact.
As a tax professional, it will be your job to sort out your small business clients’ affairs as they build their businesses. It will also be your job to help dig them out of messes when they’ve started out on the wrong road. You’ll need to educate your clients on tax codes. Specifically, you’ll need to be sure they understand the difference between sole proprietorship and incorporating.
You can only do that if you have a clear understanding of both. Our tax professionals will help you. Contact one today and begin serving a client base that will not only generate income for your business but also give you the satisfaction that comes with knowing you’ve made a huge difference in the lives and businesses of those you serve.