Did you know that “establishing a company” is not the only option when considering entrepreneurship?
In addition to establishing a company, there is also the option of “individual business”. Freelance, self-employed, private company, private company … There are various expressions, but they all have the same meaning.
Then, is it better to choose to establish a company when starting an independent business? Should I start as a sole proprietorship? First, I will summarize the merits of each.
Benefits of Establishing A Company
・ High creditworthiness in the world
・ Easy to hire employees
・ Easy to borrow
・ You can carry over the deficit (deficit) for a long time.
・ Low tax rate when profit (income) is high
・ Expenses for depreciation are optional
・ Easy to expense life insurance premiums
Benefits of Starting As A Sole Proprietorship
・ No registration fee
・ Easy procedure for starting a business
・ Simple accounting treatment is permitted
・ If there is no profit (deficit), no tax will be charged.
・ Low tax rate when profit (income) is low
Each has its own merits, so you may be wondering which one to use. Therefore, in order to clarify what kind of judgment criteria should be used, I will introduce some ideas in the form of cases. Let’s think together.
Cases That Emphasize Initial Cost (Cases Where Individual Business is Selected)
Mr. M, whose income from online sales of miscellaneous goods started as a side business has increased year by year. It’s about time that I can earn a stable income without having to work for a company. However, considering future living expenses, I would like to keep the initial cost as low as possible and start an independent business. In this case, the point is to compare the initial costs.
About in order to establish a Co., Ltd. 20 million and about even in the joint company 6 company establishment cost of million yen will occur. This is like a flat fee to the country, so even if you do all the procedures yourself, it will be incurred. On the other hand, if you want to start a private business, you only need to notify the tax office (free of charge). Therefore, Mr. M decided to start as a sole proprietorship in order to reduce the initial cost.
Cases Where There Was A Request From A Business Partner (Case Where We Chose To Establish A Company)
48 -year-old A’s was Otsutome to the company that wholesale sales of machinery to be used in the factory. Since the president of the company is thinking of retiring soon, I was asked by Mr. A, who had worked for many years, to take over as the business partner. The company is scheduled to go out of business, and Mr. A himself wants to be represented by a news organization.
The point of this case is that there was a transaction with a listed company. As a business partner of a listed entrepreneur is not allowed to be a sole proprietorship, as a result, the option of sole proprietorship disappeared and Mr. A decided to establish a company.
Cases Stipulated By Law (Cases Where You Choose To Establish A Company)
Mr. Y who worked for a company that provides home-visit care. I was thinking about setting up an ideal home-visit nursing care facility independently. First of all, I was thinking of starting on a small business scale, so I was thinking of a sole proprietorship.
In this case, the point is the “long-term care business”. Legal personality is required as one of the requirements for obtaining permission from a designated long-term care provider to engage in a long-term care business. In other words, even a small company cannot start a long-term care business without establishing a company. Mr. Y established the company and became a designated long-term care company safely.
Cases That Consider Tax Savings (Cases That Choose To Establish A Company)
Mr. S has already been a sole proprietor for several years. I am the only master of the construction industry. Annual sales are about 20 million yen, payment to another parent who called to the site for support is about 10 million yen, payment of other expenses is 4 million yen, and deduction of 6 million yen is the annual take-back amount. When I heard from an acquaintance in the same industry that “it is cheaper to make a company,” I was wondering whether to continue my personal business or establish a company.
This time, it is an example of a so-called “corporation”, which changes from a sole proprietorship to a company organization. In this case, tax saving is the point. The specialist in registering the establishment of a company is a judicial scrivener, but the specialist in tax saving is a tax accountant. As a result of consulting with a tax accountant who is good at opening a business, Mr. S found that establishing a company would save tax. In addition to saving income tax and corporate tax, I was taught how to delay the payment of consumption tax, and I immediately established the company.
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