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Lit1 Task 1

In: Business and Management

Submitted By alchemie
Words 2350
Pages 10
Task 1 Part A
SOLE PROPRIETORSHIP:
• LIABILITY –From a legal point of view there is no distinction between the assets of the business owner and the business itself. Business assets can be used to pay personal debts and personal assets can be used to pay business debts as sole proprietorships are subject to unlimited liability.
• INCOME TAXES – All income generated through sole proprietorships is considered ordinary personal income tax to the owner and is subject to the highest rate of taxation by the Internal Revenue Service.
• LONGEVITY/CONTINUITY – Because the business owner and the business are the same legal entity, the business will dissolve upon the death of the owner. However, it is possible to sell or give the business to someone else.
• CONTROL – Since there can be no business partners in a sole proprietorship, all control of business decisions rests with the owner.
• PROFIT RETENTION – All profits generated from a sole proprietorship are income for to the business owner after all the business debts and obligations are satisfied.
• LOCATION – There are no legal requirements to start a sole proprietorship on a federal level however each state has different requirements for filing for licenses and permits.
• CONVENIENCE/BURDEN – The convenience of having a sole proprietorship is that the owner has full control of the business in every way. The main problem with sole proprietorships is that they are difficult to get funding for which increases the difficulty of starting a business.

GENERAL PARTNERSHIP:
• LIABILITY – As each of the business partners is jointly and severally liable for any and all business debts and liabilities. Their personal assets can be used to satisfy business debts regardless of knowledge of wrongdoing or malpractice.
• INCOME TAXES – Each

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