Lit1 Task 1

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Peter Nero
LIT1 –Task 1

A1a: The Sole Proprietorship is the most common business form in the U.S. It offers the advantages of no-cost, easy startup, and full owner/operator autonomy with regard to business decisions. ·Liability: The owner/operator of a Sole Proprietorship is subject to full and unlimited financial liability for the business. The owner and the company are legally the same entity. The company’s assets are legally the same as the owner’s personal assets. ·Income Taxes: The owner of a Sole Proprietorship pays taxes in the earnings of the company as personal income. ·Longevity/Continuity: Because the owner of a Sole Proprietorship and the business, are legally one and the same, when the owner of the business dies, the business legally ceases to exist. The business cannot be passed on to any heirs. ·Control: The owner is not allowed to have any business partners, and has full autonomy with regard to business decisions. ·Profit Retention: There are no investors or partners in a Sole Proprietorship. All profits belong to the owner exclusively. ·Location: Sole Proprietors are not required to register the business with the state. As long as the enterprise is legal in a given state, the owner/operator may do business wherever they are. ·Convenience/Burden: Sole Proprietorships don’t have any requirements or extra work placed upon them to comply with any financial reporting, or regulatory requirements. The owner may elect for a DBA (Doing Business As) company, as customers, and especially banks, may feel the company is more legit if it has a company name different from the owners name.

A1b: The General Partnership is a business form in which two or more people agree to share the profits and losses of the business. ·Liability: General partners are seen as legally the same entity as the partnership. The partners enter into being jointly and severally unlimitedly liable to their creditors. Creditor may go after the assets of partnership unit, and further may go after each individual partner’s personal assets to satisfy a liability. ·Income Taxes: The partners pay taxes on their share of profits as personal income. ·Longevity/Continuity: The death of any general partner causes the partnership to dissolve. · Control: No single partner controls the partnership. All general partners have a voice in the daily business workings of the partnership. · Profit Retention: All profits are equally shared among the general partners. · Location: Aside from a local business license, General Partnerships are not required to register their businesses. As long as the enterprise is legal in a given state, the partnership may do business. ·Convenience/Burden: General Partnerships don’t have any requirements or extra work placed upon them to comply with regulatory requirements. There are no formation fees, franchise fees, or ongoing state fees. They are required to file an informational report with the IRS of the profits passed to the general partners.

A1c: The Limited Partnership is a business form in which investors known as limited partners agree to share in the profits of a partnership without having a voice in partnership management. ·Liability: General partners are seen as legally the same entity as the partnership. They are jointly and severally unlimitedly liable to their creditors. Creditor may go after the assets of partnership unit, and further may go after each individual general partner’s personal assets to satisfy a liability. A limited partner’s liability is limited to the amount of their investment. ·Income Taxes: All partners pay taxes on their share of profits as personal income. ·Longevity/Continuity: The death of any general partner causes the partnership to dissolve. · Control: No single partner controls the partnership. All general partners have a voice in the daily business workings of the partnership. A limited partner is not allowed to take part in...
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