Types of Businesses

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Part A
Sole Proprietorship: A sole proprietorship is a business owned by one person. It is the most frequently used form of business and most small businesses begin as sole proprietorships. It is the easiest and cheapest type of business to start. •Liability: A sole proprietor is financially accountable for all of the unpaid debts of the business. The sole proprietor’s business assets and liabilities and his or her personal assets and liabilities are the same. If the business were to go out of business, bill collectors could come after the business owner’s individual wealth to pay the debts owed to them. •Income Taxes: Sole proprietors do not have to file a separate business tax return. All profits and losses are reported on the individual’s own income tax return. •Longevity or Continuity of the Organization: The business stops when the sole proprietor dies. Occasionally, a sole proprietorship can continue to be successful after losing the experience and capability of its sole owner. •Control: Sole proprietors are in total control of their business. There is no person over you or partner to answer to. •Profit Retention: Sole proprietors collect all income produced by the business to keep or reinvest. •Location: A sole proprietor is able to conduct business in any or multiple states without regulation. •Convenience or Burden: Sole proprietorships are extremely simple and easy to start. There is generally no need to hire a lawyer. The only legal paperwork is applying for the suitable state or local permits and licenses. If the sole proprietor plans to run the business under a name other than his or her own they will need to obtain a business license. General Partnerships: A general partnership is two or more people coming together to run a single business. Each is a representative of the other partner (or partners) with complete permission to act for the other or the whole firm within the range of its activities. •Liability: Each partner is...
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