Sole Proprietorships

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1. The vast majority of business in the United States are owned and organized under one of four forms. A sole proprietorship is a business that is owned and managed by one individual. A sole proprietorship is simply an extension of the owner. Any earnings of the company is treated as the income of the owner. A partnership is a voluntary agreement under which two or more people act as co-owners of a business for profit. In its more basic form known as general partnership, each partner has the right to participate in the company’s management and share profits, but has liability for any debts the company might have. A corporation is a business entity created by filing a form known as articles of incorporation with the appropriate state agency, paying the states incorporation fees, and meeting other requirements. A corporation is considered to be a legal entity that is separate and distinct from its owners. A limited liability is a hybrid form of business ownership that is similar in some respects to a corporation while having other characteristics that are similar to a partnership. This is a legal entity separate from its owners. The owners can elect to have their business taxed either as a corporation or a partnership. 2. Sole proprietorships have some advantages. The ease of formation, the paperwork and costs involved in forming a sole proprietorship are minimal. No special forms must be filed, and no special fees must be paid. Retention of control, the owner has the ability to manage his business the way they want to. Pride of ownership, the owner feels pride and personal satisfaction of owning and running their own business. Possible tax advantages, to taxes are levied directly on the earnings of sole proprietorships as a business. The earnings are taxed only as income to the proprietorship. Then there are disadvantages about forming a sole proprietorship. Limited financial resources, raising money to finance growth can be tough. Suppliers may be unwilling...
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