Unit 1: Sole Proprietorship

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Ronald Lyday (000337108) LIT1 Task 310.1.2-01-06 Part A (Rev. A) Sole Proprietorship    In a Sole Proprietorship the owner is the one responsible for the ownership and conduct of all business. All decisions, whether good or bad, are made by the owner. Income taxes are assessed as personal income for the proprietor, which is at a higher rate than other forms of income. The company can be maintained for as long as the proprietor desires to conduct business on their own. If the proprietor becomes disabled or dies the business is directly impacted. It may cease to exist. All business decisions are made by the proprietor. The proprietor can maintain their own schedule. Growth or expansion is the sole decision of the owner. All profits from…show more content…
Income taxes are assessed as personal income for each individual. A general partnership may continue as long as the partners desire to conduct business together. If one of the partners passes away their interest but not ownership is passed on to a personal representative. The personal representative will ensure any profits or surplus left from liquidation of the business are passed to the heirs of the deceased. All partners normally have an equal say in all business decisions. This can be modified as a condition of the initial negotiation to do business together. All profits are generally distributed equally among the partners. Business is generally conducted in close proximity to the location of the business. Expansion can only be approved by a majority decision by all partners. A disadvantage of a General Partnerships is each partner is subject to unlimited liability. All personal assets of the partners may be at risk if business debts are not paid. One advantage of a General Partnership is it allows each partner to share capital and…show more content…
Only company assets may be claimed if debts are not paid. Taxes are paid based on net income. Individual shareholders are also taxed on dividends. This is a form of double taxation. A corporation can exist for a limited time or as long as there is a board to carry on business on a continuous basis. The C-Corporation the stockholders are responsible for the day to day operations of the business. The stockholders are the employees, officer and directors of the board. Profits are utilized to pay bonuses to board members and are issued as dividends to the shareholders. Bonuses must be accounted for and properly publicized to shareholders. The business is usually located in the state that it does business. It can be registered in another state and do business elsewhere as long as business laws for the originating state are properly followed. A disadvantage of a C-Corporation is it requires attorneys and accountants to properly conduct business. Profits must be legally and accurately accounted for. An advantage of a C-Corporation is owners can set salary levels at whatever they wish instead of paying dividends like ordinary

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