A-Cut-Above Lawn Maintenance And Landscaping

A-Cut-Above Lawn Maintenance and Landscaping is a sole proprietorship form of business that is under the ownership of John White. The business has no stock since it is not incorporated. The A-Cut-Above Lawn Maintenance and Landscaping became registered fort business operations in September 2013 and is based in Houston, Texas. The sole proprietorship business has to plan for risks that can affect the business (Malecki, 1992). For instance, because of the nature of the business, employees may experience some injuries which the business has to compensate for. Besides, the business requires having liability coverage in order to cover errors and omissions that may occur or even cases of employee misconduct. Therefore, John White will require to have an adequate insurance coverage. The insurance coverage should be affordable to John White. An unaffordable insurance coverage will have the effect of increasing operating costs, which is likely to lead to the closure of the business.

Besides, in planning for risks in the business, John White will require to factor in the amount of tax payable and its implications for the business. Since the business is a sole proprietorship, the business will not be taxed separately from its owner (Cowan, 2005). The business owner will be required to report all the income or losses of the business on his personal income tax return (Cowan, 2005). Therefore, the profits of the business will pass from the business to the owner for personal tax return. This will imply that the sole proprietorship business will not be capable of cutting its tax bill since every income or loss will have to pass to John White for personal income tax return. This is different from a corporation since a corporation will be treated as a separate entity while submitting taxes (Seidman, 1950).

References

Cowan, N. (2005). Risk analysis and evaluation. Canterbury, UK: Institute of Financial Services, School of Finance.

Malecki, D. S. (1992). Risk management: When sole proprietor decides to incorporate be sure to consider coverage continuity. Rough Notes, 135(8), 36.

Seidman, J. S. (1950). A comparison of tax advantages of a corporation v. partnership or sole proprietorship. Journal of Accountancy (Pre-1986), 90(000002), 104.