Lit 1 Task 1 Part a

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SOLE PROPRIETORSHIP: Sole proprietorships are the most common form of business in the United States. You and your business are one in the same. While being your own boss as its advantages, like working your own hours and collecting all profits made by the business, there are some disadvantages. For starters is coming up with starting working capital. Most Sole Proprietors have to seek funds from other sources.

• LIABILITY – All liability rests in the sole proprietors shoulders. There is no hiding from liabilities of the company for the owner, nor is the business sheltered from liabilities of the proprietor. • INCOME TAXES – Since the owner and his/her business are one in the same, all income is then treated as personal income to the owner. Ordinarily personal income suffers the highest tax rate which makes it difficult to take advantage of lower income tax rates. • LONGEVITIES/CONTINUITY – Unless explicitly stated in the sole proprietors will, when the owner dies the business dies with him. • CONTROL – As sole proprietor, he or she has absolute control and the business is under the direction of the proprietor. The owner controls the organization and all its functions. • PROFIT RETENTION – All profits generated by the business are retained by the proprietor. • LOCATION – Being sure to follow all state laws and regulations, the sole proprietor may move their business wherever they want with minimal effort. • CONVENIENCE/BURDEN – As it is the easiest form of business, it is also a hassle to get business financing from the banks. GENERAL PARTNERSHIP: General partnerships are a legal business entities where there are two or more people who share profits as well as debts and liabilities. Each partner may act on the behalf of the general partnership and all involved having an equal say in the direction of the business. • LIABILITY – Business debts cannot only eat up all of the assets of the firm, but all assets of all partners. • INCOME TAXES – Not subjected to...
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