lit1 task 3
Part A
SOLE PROPRIETORSHIP:
LIABILITY – Sole Proprietorship caries a large amount of liability because your personal credit can be affected if business fails.
INCOME TAXES – As a sole proprietorship you only file one income tax for yourself and your business combined.
LONGEVITY/CONTINUITY – A Sole proprietorship can grow as fast or as slow as the owner chooses.
CONTROL – Sole proprietor has complete control over every aspect of the business. The sole proprietorship can grow at fast or slow as the sole proprietor chooses.
PROFIT RETENTION – In sole proprietorship the company’s profit is the same as your individual earnings.
LOCATION – A key to sole proprietorship is that you aren’t required to have a physical location to make your business successful.
GENERAL PARTNERSHIP
LIABILITY- The general partners are both responsible for the debts created by general partnership. This can be a negative as one partner can do something to harm the business, but both would end up being responsible.
INCOME TAXES- A general partnership isn’t subject to income taxes separate from the normal 1040. Each partner does have to file form 1065. Form 1065 reports the partnership’s gross income, taxable income, and business related deductions. The partners must also report their share of the profits.
LONGEVITY/CONTINUITY- If one of the partner quits, the company can be dissolved.
CONTROL- The partnership has to agree upon what percentage each partner receives.
PROFIT RETENTION- The partnership has the ability to decide how the profits are allocated amongst each partner.
LIMITED PARTNERSHIP
LIABILITY- Limited partners typically have limited liabilities, and can only lose their initial investment.
INCOME TAXES- The limited partnership can either be taxed as a partnership or a corporation, depending on how the company is ran. If two of the following conditions apply, you will be taxed as a corporation.
The Business has transferable ownership interest.
SOLE PROPRIETORSHIP:
LIABILITY – Sole Proprietorship caries a large amount of liability because your personal credit can be affected if business fails.
INCOME TAXES – As a sole proprietorship you only file one income tax for yourself and your business combined.
LONGEVITY/CONTINUITY – A Sole proprietorship can grow as fast or as slow as the owner chooses.
CONTROL – Sole proprietor has complete control over every aspect of the business. The sole proprietorship can grow at fast or slow as the sole proprietor chooses.
PROFIT RETENTION – In sole proprietorship the company’s profit is the same as your individual earnings.
LOCATION – A key to sole proprietorship is that you aren’t required to have a physical location to make your business successful.
GENERAL PARTNERSHIP
LIABILITY- The general partners are both responsible for the debts created by general partnership. This can be a negative as one partner can do something to harm the business, but both would end up being responsible.
INCOME TAXES- A general partnership isn’t subject to income taxes separate from the normal 1040. Each partner does have to file form 1065. Form 1065 reports the partnership’s gross income, taxable income, and business related deductions. The partners must also report their share of the profits.
LONGEVITY/CONTINUITY- If one of the partner quits, the company can be dissolved.
CONTROL- The partnership has to agree upon what percentage each partner receives.
PROFIT RETENTION- The partnership has the ability to decide how the profits are allocated amongst each partner.
LIMITED PARTNERSHIP
LIABILITY- Limited partners typically have limited liabilities, and can only lose their initial investment.
INCOME TAXES- The limited partnership can either be taxed as a partnership or a corporation, depending on how the company is ran. If two of the following conditions apply, you will be taxed as a corporation.
The Business has transferable ownership interest.