The Advantages of Sole Proprietorship in Illinois
A sole proprietorship in Illinois begins when a single individual decides to start a business. An Illinois sole proprietor and the business are the same legal entity, which means the owner has unlimited liability for company debts and obligations. On the bright side, sole proprietors in Illinois have complete control over all facets of the business, and there's little intervention from the government, as explained by the CyberDriveIllinois website.
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Ease of Formation
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A sole proprietorship is the easiest type of business to form in Illinois. Unlike a corporation or a limited liability company, an Illinois sole proprietor doesn't have to file paperwork with the Illinois Secretary of State to begin the existence of the business. As of 2011, it costs $500 to form an LLC in Illinois, and $175 to form an Illinois corporation. Forming a sole proprietorship allows business owners to avoid these types of formation costs.
Control
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Illinois sole proprietors have the freedom to run the business in any way. The owner of an Illinois sole proprietorship is responsible for making all business decisions. Because there are no other owners, there's no need to hold meetings with other individuals to make business decisions. This eliminates the need to vote on issues, which allows a sole proprietor to react more quickly to changes in the marketplace. Furthermore, sole proprietors in Illinois may use company resources in any legal manner, as the business doesn't have other owners looking to receive a distribution from the business.
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Taxes
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Sole proprietors in Illinois don't have to file taxes as a business entity, which means the company's profits are free from corporate-level taxation. An Illinois sole proprietor passes business losses and profits directly to his personal income tax return. This means the owner pays taxes on company profits at her personal income tax rate. Also, a sole proprietor may use business losses to offset income gained from other sources, according to the Reference for Business website. This may result in the owner having a lower personal tax liability.
Considerations
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An Illinois sole proprietor doesn't have many formalities to deal with. There's no need to select officers or elect a board of directors. The owner of the business doesn't have a requirement to hold meetings or record how the company makes decisions. Although it's highly advisable, an Illinois sole proprietor isn't legally required to separate his personal money from the company's money. The state of Illinois doesn't require sole proprietors to file annual reports or pay annual fees.
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