...Part A Sole Proprietorship A sole proprietorship is essentially a small business that is headed by one party or owner, referred to as an entrepreneur. As a sole proprietorship, the debt liability rests entirely on the owner. This means that they can be sued by creditors to collect business debts. Also, if the business owner has any unpaid personal debts, creditors may attempt to collect them from the business profits. Issues such as injuries, lawsuits, and torts that may arise will find the owner completely responsible. Because a sole proprietorship is not a corporation, the business owner is taxed differently. They must report all losses and profits to the Internal Revenue Service and keep current and accurate financial records for their business. They are also allowed certain deductions and exemptions on their taxes such as marketing costs, travel expenses, and startup fees and must pay self-employment taxes. Because the business is indistinguishable from the actual owner, the longevity is limited to the owner’s health. In other words, unless it is sold and legally transferred to another owner, the business will dissolve upon the death of the original owner. The sole proprietor has complete control, which involves the power to make all of the important decisions regarding their business. This can be advantageous because the owner has liberty to do as they please creatively and strategically, but it can also be an enormous amount of pressure for one person. Failure...
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...LIT1 Task 1 part A Sole Proprietorship- This is the most common way to do a startup business in the US. There is no distinction between the owner and the business. This is owned by one person * Liability- The owner of the business is solely responsible for all liability (unlimited liability) * Income Taxes- The owner of the business pays taxes on the income generated as ordinary income. For tax purposes, all income needs to be reported on their personal tax forms. * Continuity-When the owner dies, the business dies with them * Control-The owner maintains control of the entire business throughout the life of the business * Profit retention- The owner keeps all the profit from the business * Expansion- The owner can expand or contract the business at will within compliance of the state laws * Compliance- In order to start a business the owner doesn’t need to do much. Taking freelance work or simply telling someone you are a business is legally all you need to start. Sole proprietorship does not have all the rules and regulations of some other business organizations. General Partnership- This is formed when two or more people agree to form a business and share in the profits, losses and responsibilities as partners equally. Easy to set up and can be financed in more than one way. * Liability- Each partner is jointly liable for the entire debt and losses of the business and the other partner. * Income Taxes-Income for the business...
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