task 1 proprietorship
1 LITI Task 1 Business Organizations
Sole Proprietorship
A sole proprietorship is owned by one person that runs the business. No formalities are necessary since the business is not owned by anyone else.
There are some advantages and disadvantages of owning a sole proprietorship. One advantage is that the business can be closed down at any time and any financial obligations can be paid off.
Another advantage is that the business has no boss, partner, or board of directors to answer to.
One disadvantage is that there are limited personal financial resources. You will have to have the credit to borrow money and if the business fails, creditors can come after business assets as well as personal assets.
Liability: Business assets and liabilities become the owner s personal assets. If the business fails, creditors can come after personal assets as well as the business assets and liabilities. Income Taxes: The owner is taxed for the income of the business. The owner gets to write off all of the deductions which can be written off against the owner s personal income. Longevity/Continuity: If the owner of the business dies, unless stated in the Will, the business will most likely die too.
Control: The owner does not have to answer to a boss, partners, or a board of directors.
The owner gets to make all of the decisions concerning the business.
Profit Retention: The owner is entitled to all of the profit of the business.
Location: The state that a sole proprietorship operates in is governed by that state law.
2 LITI Task 1 Business Organizations
General Partnership
A general partnership is similar to a sole proprietorship except for the business has multiple owners. An advantage of a general partnership is that there aren t any stockholders to share the profits with. Another advantage is that the partners can pool together their financial resources. A disadvantage of general partnerships is that all of the partners share all of the
Sole Proprietorship
A sole proprietorship is owned by one person that runs the business. No formalities are necessary since the business is not owned by anyone else.
There are some advantages and disadvantages of owning a sole proprietorship. One advantage is that the business can be closed down at any time and any financial obligations can be paid off.
Another advantage is that the business has no boss, partner, or board of directors to answer to.
One disadvantage is that there are limited personal financial resources. You will have to have the credit to borrow money and if the business fails, creditors can come after business assets as well as personal assets.
Liability: Business assets and liabilities become the owner s personal assets. If the business fails, creditors can come after personal assets as well as the business assets and liabilities. Income Taxes: The owner is taxed for the income of the business. The owner gets to write off all of the deductions which can be written off against the owner s personal income. Longevity/Continuity: If the owner of the business dies, unless stated in the Will, the business will most likely die too.
Control: The owner does not have to answer to a boss, partners, or a board of directors.
The owner gets to make all of the decisions concerning the business.
Profit Retention: The owner is entitled to all of the profit of the business.
Location: The state that a sole proprietorship operates in is governed by that state law.
2 LITI Task 1 Business Organizations
General Partnership
A general partnership is similar to a sole proprietorship except for the business has multiple owners. An advantage of a general partnership is that there aren t any stockholders to share the profits with. Another advantage is that the partners can pool together their financial resources. A disadvantage of general partnerships is that all of the partners share all of the