Lit 1 Task 1
Sole Proprietorship
Liability- Owner is liable for 100% of debts, taxes and liabilities.
Income Taxes- Taxed like regular income tax; owner claims it at year end and pays income tax on all earnings.
Longevity/Continuity- Company will likely die off if owner does. The company, being one and the same as the owner, cannot continue without measures being taken to pass on
Control- Owner has complete control over all decisions made; complete autonomy
Profit Retention- All profit belongs to owner
Location- The only reason location is an issue is filing for local and state permits based on the business type; may pick up and move when and wherever owner desires. Would need to file a DBA form if owner is operating under a different name
Convenience/Burden- Limited financial availability; family income disappears after death of owner; only one sharing the burden of running business
General Partnership
Liability- Partners share all profits but are completely liable for all debts associated with the partnership, just as one would with a sole proprietorship
Income Taxes- Taxes are paid as personal income tax; similar to that of a sole proprietorship, income is split up per their agreement and then taxed accordingly. No federal taxes will be imposed, as this is a pass through entity, only personal income tax will be taken
Longevity/Continuity- Once a partner dies, partnership is immediately dissolved and partners may choose to regroup.
Control- Any partner can make decisions for all partners; if one partner enters into a contract with a third party, the entire partnership is liable for any and all promises made and is responsible for seeing the contract through.
Profit Retention- Partners share in all profit and losses based on contract percentages
Location- Business may move or open a new storefront as long as partners are in agreement at the named percentage in the contracts. Partnership may move as long as a new DBA is filed in the
Liability- Owner is liable for 100% of debts, taxes and liabilities.
Income Taxes- Taxed like regular income tax; owner claims it at year end and pays income tax on all earnings.
Longevity/Continuity- Company will likely die off if owner does. The company, being one and the same as the owner, cannot continue without measures being taken to pass on
Control- Owner has complete control over all decisions made; complete autonomy
Profit Retention- All profit belongs to owner
Location- The only reason location is an issue is filing for local and state permits based on the business type; may pick up and move when and wherever owner desires. Would need to file a DBA form if owner is operating under a different name
Convenience/Burden- Limited financial availability; family income disappears after death of owner; only one sharing the burden of running business
General Partnership
Liability- Partners share all profits but are completely liable for all debts associated with the partnership, just as one would with a sole proprietorship
Income Taxes- Taxes are paid as personal income tax; similar to that of a sole proprietorship, income is split up per their agreement and then taxed accordingly. No federal taxes will be imposed, as this is a pass through entity, only personal income tax will be taken
Longevity/Continuity- Once a partner dies, partnership is immediately dissolved and partners may choose to regroup.
Control- Any partner can make decisions for all partners; if one partner enters into a contract with a third party, the entire partnership is liable for any and all promises made and is responsible for seeing the contract through.
Profit Retention- Partners share in all profit and losses based on contract percentages
Location- Business may move or open a new storefront as long as partners are in agreement at the named percentage in the contracts. Partnership may move as long as a new DBA is filed in the