Law 421 Week 4 Assignment

Business Form | Number of Owners? | Are Owners Liable for the firm’s debt? | Do Owners manage the firm? | Does an Ownership change dissolve the firm? | Access to Capital | Taxation | Sole Proprietorship | There is only one owner of a Sole Proprietorship. | The owner of a sole proprietorship is completely liable for paying any and all business debts. This also includes any losses, taxes, and lawsuits. If the firm cannot pay the debts incurred, the owner must use personal property or any other stock or such from another business. | Technically yes the owner manages the sole proprietorship. This does not mean that he/she cannot hire employees and/or have someone ‘manage’ the business. The final line is though; the owners’ decisions are the final word. | A sole proprietorship dissolves upon the owners’ death or selling of the business. Even if the spouse or other person is given rights to operate the business after the owners’ death, a new sole proprietorship has legally been started. | Owners of sole proprietorships are going to have a difficult time acquiring capital for the business. The personal liability of a sole proprietorship makes investors leery because of the personal debt liability. | Taxation of a sole proprietorship is figured on the owners personal taxes. The owner is responsible for reporting all gains and losses for the firm on his/her income tax. | General Partnership | A general partnership is a business entity that is made up of two or more entities to carry on a trade or business. | All the partners are personally liable for the partnership debts | Limited partners are prohibited by law from participating in management, can lose more than their investments, and get less than the general partners of unusually high profits | One partner can transfer a profit interest to an external party, but not control. | The general partners usually receive a management fee and share in profits. | There is only one level of taxation. General partnership

References: http://www.quickmba.com/law/partnership/general/ http://www.taxes.ca.gov/Income_Tax/limitedpartbus.shtml