Question

Proprietorship discuss the entity’s tax and non-tax characteristics. Then, describe a situation in which a taxpayer would choose this type of entity by providing an example.

Answer 1

Whenever the business or services require personal attention of customers by the owner himself, then we cant choose partnership or other form of ownership like a Doctor needs to treat patients, then he can only do the needful. Another example can be of Legal Advocates.

On the Tax Front, a professional would like to choose a Proprietorship as it would benefit him and save from unnecessary compliance and legal issues of establishing a Corporate.

On the operation forefront also, a Proprietorship would be easier to operate for a sole professional like doctor, legal advisor, auditor etc.