Business Venture
Project
Proposal
EGR 403
Section 03
Team 2
Type of Project
Sole Proprietorships
vs.
Corporations
Group Members and Roles




Francisco Hernandez-Summarizer
Henok Kebede-Techy
Jason Lee-Techy
Michael Vandersluis-Organizer
Scenarios






Location of business: Southern California
Initial Investment:$100,000.00
Patent a Design
Legal Issues
Financial Issues
Sensitivity Analysis
Legal & Financial Issues
Sole Proprietorship:
 Higher income tax rate
 Unlimited Liability
 Profits flow directly to
owner’s personal tax
return
Corporation:
 Lower corporate tax
rate
 Limited Liability
Protection
 Double Tax
Change in ROR Analysis (Years)
Delta ROR (Corp-Sole)
80%
60%
40%
20%
Corporation ROR
Sole Proprietership ROR
Delta ROR
0%
-20%
-40%
1
2
3
4
5
6
Year
7
8
9
10
More ROR Analysis
ROR Depending on First Year Sales
Income based on Sales in first year
Corp ROR
Sole ROR
Delta ROR (Corp-Sole)
300%
250%
$450,000.00
200%
$400,000.00
150%
$350,000.00
Personal Income
100%
50%
0%
-50%
$300,000.00
$250,000.00
$200,000.00
$150,000.00
-100%
$100,000.00
-150%
$50,000.00
00
$1
,50
0,0
0,0
,40
$1
,30
0,0
00
00
00
$1
$1
,20
0,0
0,0
,10
$1
,00
0,0
00
00
-200%
$1
Sole Proprietorship
Incorporated
$0.00
1000000 1100000
1200000 1300000 1400000
Sales in Dollars
1500000 1600000
Sensitivity Analysis
Sole Propritorship
Getting Sued the first year!
Getting Sued after 10 years!
Sole Proprietorship
Incorporated
Incorporated
400
100
200
300
400
-100
-200
-300
-400
-500
-600
Dollars in the hole (in 1000's of dollars)
500
600
Personal income for year 10 (in 1000's of
dollars)
Amount lost
(in 1000's of dollars)
100
300
200
100
0
-100
0
200
400
600
800
-200
-300
-400
-500
Amount you were sued for (in 1000's of dollars)
1,000
1,200
Resources




The law of corporations and other business
organizations / Angela Schneeman
Statistics of income. Sole proprietorship returns
Publication (United States Internal Revenue
Service)
Statistics of income. Partnership returns / Dept.
of the Treasury, Internal Revenue Service
Internet (i.e. www.ss.ca.gov/business/business.htm,
www.privacyprotection.ca.gov, www.entrepreneur.com,
www.nolo.com, www.corp.ca.gov, www.sba.gov)