Sole Proprietorship And Limited Liability Company

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Sole Proprietorship and Limited Liability Company For the past two years, Acme has been working out of the owner’s garage as a sole proprietorship. Which means there is one entity and there is no separation of the company and the owner. The sole proprietorship and the owner are one and the same meaning the business is not taxed but rather it is the owner’s income. The sole proprietorship is the least expensive to form. This type of entity has disadvantages of the owner being liable for all the debts of the company. Another disadvantage is the owner has to sign all contracts in their name which makes them personally liable for any legal action that could incur. Since Acme is a sole proprietorship, if someone is hurt on a business related…show more content…
This structure has a pass-through tax entity meaning the business profits and losses taxes pass through to the business owner’s personal income taxes (Mancuso, 2015). However, it will decrease the owner’s liability. With a firework display show, there are some risks of liability. With the Sole Proprietorship, the owner could have to go out of business if an issue occurred and he was sued for liability. Employment Types and Agency Law Acme fireworks owner is looking at the extra workload that is transpiring through the new contracts with the large retailers. The owner thinks that new employment would be needed to produce that many shows. The owner really needs to have gratuitous agents to help with the firework displays. These agents would not seek compensation and that would really help with his predicament of hiring new employees. However, the work is hazardous and demanding, it would be better to obtain skilled employees that are loyal and reliable. The manager of the fireworks has the apparent authority to hire employees for the new workload. The owner is the principal and he did not specifically tell the manager (agent) to hire new employees. However, the managers hired the new employees because he assumed that was his role as a manager. The manager has to take into consideration of the laws involved in hiring new
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