Task 1: Legal Issues For Business Organizations
Chris Fowlks
Student ID: 000433225
Legal Issues for Business Organizations
Task 1
SOLE PROPRIETORSHIP: A sole proprietorship is the easiest and most simple business form to operate under. The sole proprietorship itself is not a legal entity. In a sole proprietorship, the person who owns the business is personally responsible for the business debts. • Liability: The business owner is personally liable for any claims/lawsuits against the business. If a sole proprietorship is defeated in a lawsuit or is in debt, the owner/sole proprietor is personally liable.
• Income taxes: As a sole proprietorship any and all business income/losses must be reported by the owner/sole proprietor on their personal income taxes. The business is not taxed …show more content…
Sole Proprietorships cannot be sold or passed along to a new business owner. A new business entity would need to be established.
• Control: The business is fully controlled by the Owner/Sole Proprietor. The same individual manages the business and runs the day-to-day operation.
• Profit retention: In a sole proprietorship, the owner/sole proprietor retains the profits. As stated above, the income of a sole proprietorship is subject to “pass through” taxation and the business itself does not retain any income.
• Expansion / Location: Sole proprietors must simply register a new DBA (doing business as) whenever they move or expand to another state. When moving or expanding, sole proprietors should determine how tax changes in that particular state affect their business.
• Compliance / Convenience / Burden: Sole proprietorships are simple to establish. The sole proprietor/owner will need to file taxes when income is made. There is personal liability for the owner if the business faces a lawsuit. …show more content…
• Income taxes: Similar to a sole proprietorship all business income/losses must be reported by the partners on their personal income tax return. The business entity is not taxed separately.
• Longevity or continuity of the organization: If one of the general partners passes away, the partnership is dissolved, however, only after all equity has been disbursed will the partnership be terminated. The partnership may not be transferred; however, the deceased partner’s interest in the business can be left to another individual. If an agreement has been established, the remaining partners may buy the deceased partner’s interest from the heirs. The heirs are then obligated to sell and the partnership can continue.
• Control: The business is fully controlled by the partners. The control is equal among the partners unless otherwise specified in the partnership agreement.
• Profit retention: Similar to the control aspect, the profits of the business are split by the partners. Profits are usually split evenly unless it is stated differently in the partnership
Student ID: 000433225
Legal Issues for Business Organizations
Task 1
SOLE PROPRIETORSHIP: A sole proprietorship is the easiest and most simple business form to operate under. The sole proprietorship itself is not a legal entity. In a sole proprietorship, the person who owns the business is personally responsible for the business debts. • Liability: The business owner is personally liable for any claims/lawsuits against the business. If a sole proprietorship is defeated in a lawsuit or is in debt, the owner/sole proprietor is personally liable.
• Income taxes: As a sole proprietorship any and all business income/losses must be reported by the owner/sole proprietor on their personal income taxes. The business is not taxed …show more content…
Sole Proprietorships cannot be sold or passed along to a new business owner. A new business entity would need to be established.
• Control: The business is fully controlled by the Owner/Sole Proprietor. The same individual manages the business and runs the day-to-day operation.
• Profit retention: In a sole proprietorship, the owner/sole proprietor retains the profits. As stated above, the income of a sole proprietorship is subject to “pass through” taxation and the business itself does not retain any income.
• Expansion / Location: Sole proprietors must simply register a new DBA (doing business as) whenever they move or expand to another state. When moving or expanding, sole proprietors should determine how tax changes in that particular state affect their business.
• Compliance / Convenience / Burden: Sole proprietorships are simple to establish. The sole proprietor/owner will need to file taxes when income is made. There is personal liability for the owner if the business faces a lawsuit. …show more content…
• Income taxes: Similar to a sole proprietorship all business income/losses must be reported by the partners on their personal income tax return. The business entity is not taxed separately.
• Longevity or continuity of the organization: If one of the general partners passes away, the partnership is dissolved, however, only after all equity has been disbursed will the partnership be terminated. The partnership may not be transferred; however, the deceased partner’s interest in the business can be left to another individual. If an agreement has been established, the remaining partners may buy the deceased partner’s interest from the heirs. The heirs are then obligated to sell and the partnership can continue.
• Control: The business is fully controlled by the partners. The control is equal among the partners unless otherwise specified in the partnership agreement.
• Profit retention: Similar to the control aspect, the profits of the business are split by the partners. Profits are usually split evenly unless it is stated differently in the partnership