Submitted and REVISED by: Silvia Johnson for LIT1
Task 1 Part A : The Report
7 Characteristics of each type of business organization
A. Sole Proprietorship: an unincorporated business owned by one person.
1) Limited resources – based on capital and credit of one person
2) Unlimited and unshared responsibility of the sole owner;
3) Longevity or Continuity of the Organization-If the sole proprietor dies the business goes with him
4) The sole proprietor controls everything in the business. He and/or she can do it all their own of hire someone else to do it
5) Simple to start or terminate a sole proprietorship
6) Convenience; There are only a few instances when you have to have a register with the state or federal government. When you run a business under a different name then your own or you supply certain things that require licensure.
7) All profits belong to sole owner. The owner could run the day to day operations, or those duties could be handled by a general manager.
8) Pass-through taxation – simple and beneficial income tax report
9) Ability to “shelter income” – reducing taxable income by charging off costs of running a business.
A1a. Sole Proprietorship - 4 Additional characteristics are:
10) The sole proprietor may have several employees, but it is common for the sole proprietor to be the business's only employee.
11) Sole proprietorships are not necessarily required to file federal taxes under a separate employer identification number.
12) This line of business does not require a charter.
13) Can be run from a home; does not require a business address or commercial property.
14) Liability-Liability is totally the sole proprietor's. Meaning that there is no difference between the sole proprietor business and personal assets they are one and if the business fails or the sole proprietor is sued the creditors and litigants can come after both as if they are one