Lit1 Task 310.1.2-01-06

3193 Words13 Pages
PART A (the report) SOLE PROPRIETORSHIP: This is the most common form of doing business within the United States. In this type of business there is one owner and no separation exists between he owner and the business. As owner, you are entitled to all profits, and you are responsible for all losses and liabilities incurred by the business. Having full freedom to act as you will is a strong advantage to forming this type of business. Liability: As mentioned above, in a sole proprietorship the owner is held accountable for any liabilities attributed to the business. If needed, any assets belonging to the owner can be used to recover the business’s debts. Income Taxes: The Internal Revenue Service will tax all income generated by the sole proprietorship. The income is reported on the owner’s personal tax return. Longevity, or Continuity: A sole proprietorship exists as long as the owner is alive, or until he, or she, decides to sell or dissolve the business. Control: The sole proprietor has control over every facet of the business. Scheduling, outsourcing of work, and growing the business are just a few examples of the decisions belonging only to the owner. Additionally, the owner assumes every risk associated with the business. Profit Retention: Because the business and owner are autonomous, the sole proprietor has full ownership of the business’s finances. All profits belong to the owner, who can choose to do with them as they see fit. Location: In a sole proprietorship, the owner reserves the right to change location at will. The owner will need to continue to comply with all city and state registration requirements and tax obligations. Convenience or Burden: While it is quite simple to establish a sole proprietorship business, it can be difficult to raise capital. Most owners begin a sole proprietorship by applying for bank loans, or using

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