Premium Essay

Lit1 Wgu Task a

In: Business and Management

Submitted By COWGUSER
Words 4431
Pages 18
LIT1 Task 1 Part A (the report)

SOLE PROPRIETORSHIP: A sole proprietorship is the simplest, quickest and cheapest form of business to start making it the most popular types for first time business owners. A business owner and a sole proprietor may operate under different names, but legally, they are the same entity. Which leads to one of the biggest disadvantages of becoming a sole proprietor; the owner is responsible for all debts and fault created by the business. One of the major advantages to starting a sole proprietorship is the simplicity behind the formation. There is very little paperwork that needs to be filed at the inception and it takes very little work to keep the business compliant with state and federal laws. Another advantage to a sole proprietorship is taxes. Any money made by a sole proprietor is considered income to the owner. The profit is claimed as income on the owner’s annual tax filings. * Liability: Because there is no legal separation between an owner and the business in a sole proprietorship, the business owner is unlimitedly liable for any debt or fault of the business. Even if the sole proprietorship dissolves, the owner will be liable for the debt. If the debt is not taken care of in a timely manner it will could affect the owner’s credit rating and lead to future earnings being garnished. * Income Taxes: Taxation of a sole proprietorship happens once, at the income level of the owner. Any profit made by the company is considered an income to the owner. A sole proprietor is considered by the internal revenue service as self-employed, meaning the sole proprietor will not be held liable for FICA taxes. However, as the owner you will pay 100% of the self-employment tax (SECA). The annual contribution to the Self-Employment Contribution Act tax is deductible up to 50%. * Continuity: Because a sole proprietor is the…...

Similar Documents

Premium Essay

Wgu Lit1 Task 2

...| Sole Proprietorship | Description | In a sole proprietorship, the business and single owner are one in the same. A single owner makes all decisions with regard to the business and the single owner retains all profits earned by the business. The single owner is also responsible/liable for all debts and obligations of the business on a personal level. | Two Advantages | A sole proprietorship is easy to create; there is minimal creation cost and time.The single owner has autonomy in decision making; sole owner makes all decisions related to the business and has complete ownership of business’s finances. | Two Disadvantages | It is impossible to add additional owners and to pass on business, business dies with owner. A single owner faces challenges with raising working capital and all loans made for the business are the personal responsibility of the owner. In addition, the single owner may be sued personally for the business’s liabilities. | Liability | Liability is unlimited; obligations of the business are personal obligations of the owner. The single owner is 100% personally responsible for business liabilities and debts. All of the owner’s personal assets are subject to lawsuit(s) made against the business. | Income taxes | The business itself does not file a tax return. There is no legal distinction between the owner and the business. All income earned by the business is considered personal oncome by the owner. Owner faces a higher rate of taxation because all......

Words: 2283 - Pages: 10

Premium Essay

Wgu Lit1 Task 3

...Student I.D. E-Mail: Western Governors University LIT1: Task 310.1.5-02, 11, 13 Situation A: The employee’s FMLA right was satisfied when he was granted the leave by the company. The employee has been employed at the company for two years prior to his request, which clearly fulfills the requirement of working a total of twelve months before the leave must be granted by the company, which employees more than fifty employees. The request for leave was for birth care, which is a valid reason to request FMLA. All of the applicable provisions of the FMLA were adequately met for this particular employee. FMLA grants twelve weeks of unpaid time off and guarantees that the employee will then be able to return to the same job at the same rate of pay. FMLA provisions do not require paid time off as a mandatory action for the company; therefore, the employee cannot expect the company to pay eleven weeks of withheld salary and the company has not violated any FMLA rules by denying that specific request. Situation B: It is apparent the 68-year-old employee is performing his work duties adequately. The employee has an above average rating; therefore, it cannot be argued that his age is affecting his quality of work.  Nothing to suggests that his work does not meet the standards of the company.  This is an example of why the Age Discrimination Act of 1967 is so important and necessary. This given situation is an obvious violation of the Act.   The employee is......

Words: 488 - Pages: 2

Premium Essay

Wgu Lit1 Task 310.1.2

...MEMORANDUM TO: Owner From: RE: Business Options Date: September 27, 2015 _______________________________________________ Changing the way you structure your business can be a frightening endeavor. You have been operating as a Sole Proprietorship for quite some time now, but it appears you have outgrown that business type. You have expressed a need to scale the business as well as a concern for your own personal liability. With those concerns in mind as well as the current state of your business, I recommend restructuring the business into a Limited Liability Company. I will try and address each of your concerns individually and explain how I came to this conclusion. As your business grows you will be opened up to substantial risk, should you decide to remain a Sole Proprietorship. You have expressed concern over debt and liabilities of the business. As an LLC you can protect your personal assets from future risk. Heaven forbid your business sustains a serious debt or claim that it isn’t capable of paying, but if does, your house, car, and personal possessions are safe from any business creditors. As an LLC you will continue to be taxed as a Sole Proprietorship with the ability to adapt to the future status of the business. You will not pay taxes on the income of the business; however profits and losses will pass through to you and be taxed on your own personal income tax returns. Should you take on another owner in the future, you will transition to be......

Words: 588 - Pages: 3

Premium Essay

Wgu Lit1 Task 1 310.1.5

...2011). Taking into account the information provided in Situation C, we are able to infer the only limitation of the disabled individual is the ability to move freely through out the company’s multi-floored headquarters due to being unable to utilize two of the four available elevators. The argument could be made that being able to use the two accommodating elevators should be sufficient, but let us consider the possibility that certain elevators don’t have access to all floors. This would limit the applicant’s ability to perform their required duties. Upon that determination, it becomes necessary for the company to make alterations to the elevators to make them compliant with the applicant’s needs should a job offer be made. The remaining task is to determine whether the required alterations to the elevator place an undue hardship on the company. Considering the company’s number of employees, comprising over 75, and the size of its seven floor headquarters, it would stand to reason the required revenue the company must generate to maintain this level of achievement would be substantially more than the $2,000 required to modify the two out of compliance elevators preventing Applicant C from becoming a productive member of the company. Even if the one day down time of the elevator under repair were a determining factor, the company would have the three remaining elevators available to continue daily operations with minimal inconvenience to the other employees. Considering the......

Words: 2008 - Pages: 9

Premium Essay

Lit1 Task 1 Wgu Stody Guide

...LIT 1 – Task 1 | SUBDOMAIN 310.1 - BUSINESS LAW | Competency 310.1.2: Organizational Forms | | | | The following report will summarize the key differences between the various forms of legal business entities. The ownership forms covered will include sole proprietorship, general partnership, limited partnership, C-corporation, S-corporation, and Limited Liability Company. Also included will be a brief recommendation of the most appropriate form of ownership for the given manufacturing business. | Section A- For each of the various forms of business ownership, a brief description outlining the basic impact on the following criteria will be given; * Liability * Income Taxes * Longevity or continuity of the organization * Control * Profit Retention * Location * Convenience or burden Sole Proprietorship Perhaps the most common form of business ownership, sole proprietorship, is generally the simplest form of business ownership due to the lack of separation between the entity and the individual. While there are positive and negative implications to any form of business ownership, these are generally more exaggerated in the instance of sole proprietorship. The ease of formation and ownership and limited regulation are strong benefits, however, the negative aspects are far greater than in any other form of ownership. The first negative ramification is the lack of ability to continue the company after the owner either becomes unable......

Words: 2050 - Pages: 9

Premium Essay

Lit1 Task 1

...September 15, 2014 Lauren Tierman Western Governors University ltierman@my.wgu.edu Student ID: LIT1 Task 1 –Labor and Employment Law Situation A: Details * Employee A has been with Company X for two years. Employee A was given leave in order to be with their spouse and newborn. * Employee A took FMLA leave for 11 weeks. Upon returning to work, the employee wants to be paid for the time they took the leave. The previous department manager left the company during Employee A’s leave. * The new manager has agreed to place employee A in an equivalent position and pay but will not pay the employee for the 11 weeks of leave. Key Provisions and Outcome The Family Medical Leave Act refers to public and private companies, and companies that have 50 employees or more. The FMLA states that employers must give an eligible employee up to 12 weeks of unpaid leave each year. (Perez/ Department of Labor, n,d.). In this situation employee A worked at company X which has over 75 employees and took 11 of his allowable 12 weeks in accordance to FMLA. In accordance to FMLA, an employee must have worked for their employer for 12 months and must have worked 1250 hours. The employee can take FMLA for the birth and subsequent care of a newborn child. (Perez/ Department of Labor, n,d.). In this situation employee A had just recently experienced the birth of a newborn child and worked at Company X for two years. The FMLA allows for employers to......

Words: 964 - Pages: 4