Lit1 Task 1
Legal Issues for Business Org. (LIT1)
TASK 310.1.2-01-06/ Part: A
SOLE PROPRIETORSHIP: Sole proprietorship is an unincorporated business with one owner who pays personal income tax on profits from the business. The benefit of the sole proprietorship is the tax advantage. The disadvantage of a sole proprietorship is obtaining capital funding. * Liability – As the owner of a sole proprietorship, one is personally liable for all business debts, creditors may sue you personally to satisfy the debt. * Income taxes – As a sole proprietor you must report all business income or losses on your personal income tax return; the business itself is not taxed separately. * Longevity - Longevity depends on the owner and their ability to operate the business; this can be significantly affected if the owner becomes sick or dies. * Control - The owner is in complete control of the business, It is the owners responsibility for all decisions pertaining to business operations * Profit retention - The owner has 100% control of profit retention. They may choose to invest their profits or use it for personal use. * Convenience/Burden - Sole proprietorships are convenient and easy to start up since there are no governing laws. A burden of the business is the decisions made may affect the businesses success are the sole responsibility of the owner.
GENERAL PARTNERSHIP: An agreement formed by two or more persons. They are simple and inexpensive to create and operate, but the owners are all personally liable for any debts or legal actions * Liability - The liability is shared by all partners. If one partner does something negligent, all partners can be held liable. * Income taxes – All partners are responsible to report their earnings on their own personal tax returns. * Longevity – general partnerships longevity is based on the agreement between partners, they can agree to end their partnership as easily as they formed it. With a partnership between
TASK 310.1.2-01-06/ Part: A
SOLE PROPRIETORSHIP: Sole proprietorship is an unincorporated business with one owner who pays personal income tax on profits from the business. The benefit of the sole proprietorship is the tax advantage. The disadvantage of a sole proprietorship is obtaining capital funding. * Liability – As the owner of a sole proprietorship, one is personally liable for all business debts, creditors may sue you personally to satisfy the debt. * Income taxes – As a sole proprietor you must report all business income or losses on your personal income tax return; the business itself is not taxed separately. * Longevity - Longevity depends on the owner and their ability to operate the business; this can be significantly affected if the owner becomes sick or dies. * Control - The owner is in complete control of the business, It is the owners responsibility for all decisions pertaining to business operations * Profit retention - The owner has 100% control of profit retention. They may choose to invest their profits or use it for personal use. * Convenience/Burden - Sole proprietorships are convenient and easy to start up since there are no governing laws. A burden of the business is the decisions made may affect the businesses success are the sole responsibility of the owner.
GENERAL PARTNERSHIP: An agreement formed by two or more persons. They are simple and inexpensive to create and operate, but the owners are all personally liable for any debts or legal actions * Liability - The liability is shared by all partners. If one partner does something negligent, all partners can be held liable. * Income taxes – All partners are responsible to report their earnings on their own personal tax returns. * Longevity – general partnerships longevity is based on the agreement between partners, they can agree to end their partnership as easily as they formed it. With a partnership between