Preview

LIT1 Task 1 - A

Satisfactory Essays
Open Document
Open Document
1253 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
LIT1 Task 1 - A
310.1.2: Organizational Forms

Task A

SOLE PROPRIETORSHIP: This is the most common form of business as it is owned by one person, so there is no distinction between the business and the owner.

Liability – Because there is no distinction between the business and the owner, all liability falls on the owner/sole proprietor. If the business fails, both personal and business worth and assets are at risk as they are the same.
Income Taxes – Filing for income taxes are an advantage as the owner and the business are taxed as a single unit. All income acquired through the business is treated as personal income to the owner, and there is no separate federal income tax.
Longevity – A sole proprietorship relies on its owner to continue on. If the owner dies, so does the business. Without proper planning such as creating a will or purchasing life insurance, the business has no chance of surviving without the owner.
Control – One of the biggest advantages is autonomy of the business. Without any bosses, partners or corporate rules, the owner has free reign of his or her own business.
Profit Retention – All the profits and benefits go to the one owner of the business and will not have to share with anyone else. The owner can also protect their income by reducing taxable income by noting certain things as “expenses.”
Convenience – Starting and carrying on a sole proprietorship is very convenient as it is quite simple. With limited legal requirements and financial obligations, the owner can easily start a business or end it on their own terms.

GENERAL PARTNERSHIP: This kind of partnership is where two or more people are equal owners and are equally active, liable and authoritative.

Liability – Each person has unlimited personal liability for the business. Like a sole proprietorship, any debt incurred by the business will have to be covered personally by the partners.
Income Taxes – With this kind of partnership federal income tax is not applied. However,

You May Also Find These Documents Helpful

  • Better Essays

    LIT1 Task 1

    • 3141 Words
    • 13 Pages

    Liability – There are several liability within sole proprietorship. As the owner you are a…

    • 3141 Words
    • 13 Pages
    Better Essays
  • Good Essays

    WGU LIT1 Task 1

    • 3614 Words
    • 15 Pages

    Sole proprietorships are also the most convenient companies to own. Sole proprietorships are not required to produce profit reports or name officers. Sole proprietorships are not able to bring in partners or have shareholders, therefore removing the disadvantage of having to negotiate the sharing of profits or dispersal of dividends.…

    • 3614 Words
    • 15 Pages
    Good Essays
  • Satisfactory Essays

    Tax and Share Holders

    • 1469 Words
    • 6 Pages

    •INCOME TAXES-General partnerships do not pay income taxes directly to the IRS. Partners include any revenue and expenses on their personal income tax returns.…

    • 1469 Words
    • 6 Pages
    Satisfactory Essays
  • Satisfactory Essays

    The sole proprietorship is the simplest form of business, which is inexpensive and easily set up.…

    • 2039 Words
    • 9 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Lit1 Task a

    • 1400 Words
    • 6 Pages

    * The partners are each responsible to report their own earnings on their own tax return. This is the amount they received from the company as income.…

    • 1400 Words
    • 6 Pages
    Satisfactory Essays
  • Better Essays

    Legal Forms of Business

    • 1405 Words
    • 6 Pages

    A partnership is a form of business which is somewhat similar to sole proprietorship but with two or more owners. Just like sole proprietorship, the partnership is inseparable from its owners, which means the name is different otherwise the owners are representing themselves in public. However, in a partnership, each partner can be held responsible for the actions of the other partners and partnership can hold property and incur debt in its name (Lee, 2011)…

    • 1405 Words
    • 6 Pages
    Better Essays
  • Satisfactory Essays

    Acct 201

    • 7362 Words
    • 30 Pages

    Proprietorship. There is a single owner of the business, so the owner is answerable to no other owner.…

    • 7362 Words
    • 30 Pages
    Satisfactory Essays
  • Better Essays

    Lit1

    • 1720 Words
    • 7 Pages

    General partners have unlimited liability. Partners are jointly and individually liable for the actions of the other partners. Profits must be shared with others. Since decisions are shared, disagreements can occur. Some employee benefits are not deductible from business income on tax returns. The partnership may end upon the withdrawal or death of a partner.…

    • 1720 Words
    • 7 Pages
    Better Essays
  • Better Essays

    Organizational Forms

    • 1692 Words
    • 7 Pages

    The overall benefits of a sole proprietorship are the flexibility and inexpensive way you can organize and control the company. The owner can create their own policy and procedures as long as they are with the parameters of the law. They receive all income generated by their business and can reinvest as they see fit.…

    • 1692 Words
    • 7 Pages
    Better Essays
  • Powerful Essays

    Cisco Systems Analysis

    • 7467 Words
    • 26 Pages

    The proprietor has unlimited personal liability for the business’s debts, which can result in losses that exceed the money invested in the company…

    • 7467 Words
    • 26 Pages
    Powerful Essays
  • Good Essays

    Sole Proprietorship

    • 613 Words
    • 3 Pages

    Sole proprietorships are the easiest type of business structure to start. Also this has become the most common type of business structure for business owners. With a sole proprietorship the owner is the business. He or she has complete control of the business and gets to make all the decisions. Also he or she gets all the profits the business makes as well as it being state on their personal tax return. The down side to owing a sole proprietorship is that the owner is reliable for all debts occurred. All actions of the business and employees are the owners’ reasonability to take care of.…

    • 613 Words
    • 3 Pages
    Good Essays
  • Good Essays

    According to Peterson and Plowman : “ As sole proprietorship is a business unit whose ownership and management are vested in one person. This individual assumes all risk of loss and failure of the enterprise and receives all profits from its successful operation”.…

    • 549 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Business Plan

    • 477 Words
    • 2 Pages

    Sole proprietorship has many advantages and disadvantages. Some of the advantages are: ease of startup, limited ownership, simple taxation and few government and IRS regulations and are the simplest to dissolve (Editorial Board, 2011). A disadvantage is: the owner’s personal assets are not protected in the event of lawsuits or business failures (Editorial Board, 2011).…

    • 477 Words
    • 2 Pages
    Satisfactory Essays
  • Better Essays

    A lot of businesses start as sole proprietorships. There is typically one person who usually has day-to-day responsibility for running the business and that owns the firms. The Sole proprietors typically own all of the assets of the business and the profits made from it. Sole proprietorship’s also take complete responsibility for any of the liabilities or debts. The advantages of Sole proprietorship’s are that they are: The Easiest and the most inexpensive of Business organizations and ownership. Sole proprietors are in complete control of their business and, within the boundaries of the law; make a decision when they see the time to do so. Another advantage of Sole Proprietorship’s is Profits and revenues from the business go straight to the owner’s Tax return. Another big advantage of a sole proprietor Business Organization is that the Business is easy to dissolve or get rid of if needed. As there are many advantages of a Sole Proprietorship Business Organization, there are many disadvantages as well. The disadvantages include: Sole proprietors have unlimited liability and are responsible for all liabilities and debts, putting their personal assets and business at risk. Also sole proprietorships could be at a disadvantage in raising funds and are limited to using the funds from personal savings from the business and/or consumer loans. Sole proprietorships may also have a hard time getting big…

    • 1565 Words
    • 5 Pages
    Better Essays
  • Satisfactory Essays

    The most basic form of ownership is the sole proprietorship, a business own and managed by one person. This kind of business is easier of starting and ending, you also get to be your own boss; you get to retain all company profit and to have full control of your business. There are also disadvantages on a sole proprietorships business, such as unlimited liability-the risk of personal losses, limited financial resources, management difficulties, and overwhelming time commitment.…

    • 511 Words
    • 3 Pages
    Satisfactory Essays