Lit Task 1
Liability- All liability is held with the business owner. Sole proprietorship has unlimited liability and the owner will be held responsible in all levels including, financially. Because this type of business is funded by the personal owner, he/she may be required to give up personal property if the business were to fail. Even if the cause for failing were due to unforeseen circumstances such as declining market conditions or an employee’s injury due to his own negligence.
Income taxes- All taxes are reported under the individual owner instead of the business, which can result in a higher tax obligations without proper planning on the owner’s part.
Longevity or Continuity of the Organization-Funding for a sole proprietorship is difficult to obtain from banks or other financial institutions, if funding is provided by these organizations it is common that the owner must put us his/her personal property. The longevity of a business is usually determined by the companies’ access to funding. In the case of a sole proprietorship all funding is the responsibility of the owner, making it difficult to forecast amounts needed to continue running the business. It may also limit the ability for this type of business to expand.
Control- The business owner has all control under a sole proprietor; he/she can pick their own operating hours, charges for services, choose to contract work out, hire employees, and spend all monies freely. It is also important to note that the business will usually end if the owner were to become Ill or die.
Profit Retention- All