Lit 1 Task 1

Topics: Corporation, Types of business entity, Types of companies Pages: 4 (720 words) Published: March 15, 2013
Sole Proprietorship

Liability- Owner is liable for 100% of debts, taxes and liabilities.

Income Taxes- Taxed like regular income tax; owner claims it at year end and pays income tax on all earnings.

Longevity/Continuity- Company will likely die off if owner does. The company, being one and the same as the owner, cannot continue without measures being taken to pass on

Control- Owner has complete control over all decisions made; complete autonomy

Profit Retention- All profit belongs to owner

Location- The only reason location is an issue is filing for local and state permits based on the business type; may pick up and move when and wherever owner desires. Would need to file a DBA form if owner is operating under a different name

Convenience/Burden- Limited financial availability; family income disappears after death of owner; only one sharing the burden of running business

General Partnership

Liability- Partners share all profits but are completely liable for all debts associated with the partnership, just as one would with a sole proprietorship

Income Taxes- Taxes are paid as personal income tax; similar to that of a sole proprietorship, income is split up per their agreement and then taxed accordingly. No federal taxes will be imposed, as this is a pass through entity, only personal income tax will be taken

Longevity/Continuity- Once a partner dies, partnership is immediately dissolved and partners may choose to regroup.

Control- Any partner can make decisions for all partners; if one partner enters into a contract with a third party, the entire partnership is liable for any and all promises made and is responsible for seeing the contract through.

Profit Retention- Partners share in all profit and losses based on contract percentages

Location- Business may move or open a new storefront as long as partners are in agreement at the named percentage in the contracts. Partnership may move as long as a new DBA is filed in...
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