(these may not answer all of your questions about how to start your own computer business)

• Easiest and least expensive to organize.
• Sole proprietors are in complete control, may make decisions as they see fit.
• Sole proprietors receive all income generated by the business to keep or reinvest.
• Profits from the business flow-through directly to the owner's personal tax return.
• The business is easy to dissolve, if desired.

Disadvantages of a Sole Proprietorship 

(answers may vary if you decide to start your own computer business)

• Sole proprietors have unlimited liability and are legally responsible for all debts against the business. Their business and personal assets are at risk.
• May be at a disadvantage in raising funds and are often limited to using funds from personal savings or consumer loans.
• May have a hard time attracting high-caliber employees, or those that are motivated by the opportunity to own a part of the business.
• Some employee benefits such as owner's medical insurance premiums are not directly deductible from business income (only partially deductible as an adjustment to income).

Start Your Own Computer Business 

(you may want to decide whether you want to incorporate when you start your own computer business)

A corporation, chartered by the state in which it is formed, is considered by law to be a unique entity, separate and apart from those who own it. A corporation can be taxed; it can be sued; it can enter into contractual agreements. 

The owners of a corporation are its shareholders. The corporation has a life of its own and does not dissolve when ownership changes.

Advantages to Incorporating When You Start Your Own Computer Business 

(reasons to incorporate once you start your own computer business)

• Shareholders have limited liability for the corporation's debts or judgments against the corporations.
• Shareholders can only be held accountable for their investment in stock of the company.
• Corporations can raise additional funds through the sale of stock.
• A corporation may deduct the cost of benefits it provides to officers and employees.
• Can elect S corporation status if certain requirements are met. This election enables a company to be taxed similar to a partnership.

Disadvantages of Incorporating Once You Start Your Own Computer Business 

(reasons not to incorporate once you start your own computer business)

• The process of incorporation requires more time and money than other forms of organization.
• Corporations are monitored by federal, state and some local agencies, and as a result may have more paperwork to comply with regulations.
• Incorporating may result in higher overall taxes. Dividends paid to shareholders are not deductible form business income, thus this income can be taxed twice.

In this article, you've been introduced to the basics of how to start your own computer business. Click here to learn more about how to start you own computer business.