Lit 1 Task 1a

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TASK 1 (PART A)
LIT 1

SOLE PROPRIETORSHIP: The owner and the business are considered one. The owner takes all the risk and receives all the profits. It is easy and inexpensive to start up a sole proprietorship however a sole owner has trouble raising capital which could limit growth. • LIABILITY –If the business fails the owner is financially responsible and my lose everything. • INCOME TAXES – The proprietor and the business are taxed together. • LONGEVITY/CONTINUITY – The business dies with the sole proprietor. • CONTROL – There is no boss the owner has total control over the operations. • PROFIT RETENTION – All of the profits are considered personal income of the sole proprietor. • LOCATION – The owner can move or expand the business as they see fit they are easy to set up and work in any setting appropriate for the business. Most sole proprietorships are home based or have small offices and storefronts.

GENERAL PARTNERSHIP: is a business owned by two or more owners. In General partnerships each partner is fully active in the firm giving input in management and each partner is fully liable for the debts of the business. • LIABILITY – Each partner assumes unlimited liability for the debts of the business and can be held totally responsible for debts and malpractice committed by any of the partners. • INCOME TAXES – A partnership is a pass-through entity, not a separate taxable entity, and no federal income tax is imposed on the business itself. Each partner clams the profits or loss on their personal taxes. • LONGEVITY/CONTINUITY – The death of a partner may automatically end the partnership. The business may survive if the partners make a plan to continue the business. The reaming partners may transfer, purchase or sell the departing partners share of the business. • CONTROL – Each partner is fully active in the firm giving input in management of operations. • PROFIT RETENTION – The profits are considered personal income for each partner and...
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