LIT1 task 310 1 2 01 06 Task 1A
SOLE PROPRIETORSHIP: A business owned by a single person and that person is solely responsible for the debts (unlimited). It’s a business that is simple and easy to set up.
LIABILITY: The owner of the business is solely responsible. The owner signs business contracts in their own name.
INCOME TAXES: Income earned by the business is the owner’s income. The sole proprietor files at 1040 and schedule C & SE.
LONGEVITY/CONTINUITY: The business dies with the owner unless there is a Last Will & Testament leaving it to another person. The assets may also be sold to a third party.
CONTROL: The owner makes all the decisions regarding management, hiring, etc.
PROFIT RETENTION: Owner has right to retain all profits of the business. He/she does not receive a paycheck as do regular employees. They can use the money from the business for personal use.
CONVENIENCE/BURDEN: The cost of setting up a sole proprietorship is nominal as well as easy to set up. Visiting the local courthouse to complete the D.B.A. form will give the owner a certificate for the business.
LOCATION: Depending on the type of business while decide what is needed for relocation. The owner would need to file a new D.B.A. with the new state, dissolve the business in the previous state, and pay any applicable fees for both.
GENERAL PARTNERSHIP: Two or more components/people come together to share a business. Each partner shares responsibility for P&L.
LIABILITY: Both entities have unlimited liability. Should one partner conduct illegal activities then the other partner is as equally responsible.
INCOME TAXES: Self-employment taxes, income taxes, partners must report their share of P&L on their personal tax returns. A tax reporting entity.
LONGEVITY/CONTINUITY: A general partnership generally dissolves when an owner/partner dies or no longer wants to be a part of the business. Could set up a buy/see agreement to line everything out ahead of time.
CONTROL: Decisions should be documented from the beginning
LIABILITY: The owner of the business is solely responsible. The owner signs business contracts in their own name.
INCOME TAXES: Income earned by the business is the owner’s income. The sole proprietor files at 1040 and schedule C & SE.
LONGEVITY/CONTINUITY: The business dies with the owner unless there is a Last Will & Testament leaving it to another person. The assets may also be sold to a third party.
CONTROL: The owner makes all the decisions regarding management, hiring, etc.
PROFIT RETENTION: Owner has right to retain all profits of the business. He/she does not receive a paycheck as do regular employees. They can use the money from the business for personal use.
CONVENIENCE/BURDEN: The cost of setting up a sole proprietorship is nominal as well as easy to set up. Visiting the local courthouse to complete the D.B.A. form will give the owner a certificate for the business.
LOCATION: Depending on the type of business while decide what is needed for relocation. The owner would need to file a new D.B.A. with the new state, dissolve the business in the previous state, and pay any applicable fees for both.
GENERAL PARTNERSHIP: Two or more components/people come together to share a business. Each partner shares responsibility for P&L.
LIABILITY: Both entities have unlimited liability. Should one partner conduct illegal activities then the other partner is as equally responsible.
INCOME TAXES: Self-employment taxes, income taxes, partners must report their share of P&L on their personal tax returns. A tax reporting entity.
LONGEVITY/CONTINUITY: A general partnership generally dissolves when an owner/partner dies or no longer wants to be a part of the business. Could set up a buy/see agreement to line everything out ahead of time.
CONTROL: Decisions should be documented from the beginning