PART A
Sole proprietorship: A sole proprietorship has one owner and is unincorporated. Some advantages that the owner of a sole proprietorship might enjoy include total control of running the business, receiving all proceeds of the business, and multiple tax benefits. Disadvantages that the owner of a sole proprietorship might encounter include sole responsibility and liability for the business and limited access to funds and resources.
• Income taxes – The business does have a separate income tax. All profits and losses from the business are reported with the sole proprietor’s taxes by filing the “Form 1040, and along with it Schedule C.” http://www.theamericancollege.edu/pdf/fa251-class1.pdf (n.d.) Retrieved October 4, 2011 from www.my.wgu.edu
• Control – The business owner enjoys complete control of the business. There are no partners or board members to interfere with the owner’s plans to run the business. In regards to the daily operations of the business, the owner can decide to run it himself or hire someone else to run it. The owner may make changes to the business, including moving the business, expanding or selling at any time, without consulting anyone else.
• Profit retention – All profits of the business belong to the proprietor. The owner does not have to pay any partners or pay any dividends to shareholders.
• Liability – Owners of sole proprietorship have unlimited and total liability for the business. The owner’s personal assets and liabilities are not separate from the business’s assets and liabilities. If the business fails, or the owner dies or becomes disabled, creditors can seek restitution from both the business and personal assets, as they are seen as the same.
• Longevity or continuity of the business – Due to state laws, the business essentially dies with the proprietor. Clauses can be inserted into a proprietor’s Last Will and