Lit 1 Task 1

In: Business and Management

Submitted By coffey14
Words 732
Pages 3
Sole proprietorship: A sole proprietorship is a business organization, which is owned by a single individual. The individual makes all decisions for the business without having to consult with other employees or departments. There are many advantages in sole proprietorships. First off, sole proprietorships are easy to create. The owner simply starts doing business by providing goods or services and charging for the goods and services provided. In addition, the owner makes all decisions concerning the business and how it is operated. Another key advantage is complete autonomy, meaning the owner can set his or her hours of operation and utilize the finances. Sole proprietorship can only have one owner, meaning it is impossible to bring in others into the business, also if the owner dies or passes away the business does the same. It can be difficult to raise capital for a sole proprietorship. In most cases, if the entrepreneur is not wealthy, he or she will need to seek funds from outside source, for example a bank where they will treat the funds as a personal loan.

• Liability: A sole proprietorship has unlimited liability, which means the owner is personally liable for any and all obligations and debts of the business. Creditors have access to all personal assets, meaning, personal homes, bank accounts, automobiles etc. are all within reach for creditors.
• Income Taxes: A sole proprietorship pays income taxes on the business income, which is reported on the owners Form 1040 Schedule C.
• Longevity or continuity of the organization: The business would be forced to dissolve without proper planning if the owner dies.
• Control: The owner of a sole proprietorship has all control and say of a business, he or she runs day-to-day operations, makes all of the decisions and does not have to grant control to others.
• Profit retention: The owner of the business…...

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