LIT1 Task 1
LIT1 Task 310.1.2-01-06
Part A
Sole Proprietorship: A sole proprietorship is owned by only one person. All profits and losses are the responsibility of the owner only.
Liability – There is unlimited liability in a sole proprietorship. The owner is solely responsible for any debts that may occur.
Income Taxes – The business files taxes as one single unit. Because profits are not shared, they are considered personal income to the sole proprietor.
Longevity/Continuity – In a sole proprietorship if the owner dies or quits, the business dies as well. The only exception would be if the owner states in his or her will that the business can continue.
Control – The owner has complete control in a sole proprietorship.
Profit Retention – The owner retains all profits.
Convenience/Burden – The owner can start doing business as soon as they like. If the owner wishes to operate under a fictitious name a D.B.A (Doing Business As) will need to be filed. Some forms of business my require permits or licenses.
General Partnership: A business owned and operated by two or more people that share gains and losses.
Liability – There is unlimited liability in a general partnership. The owners/partners are responsible for all profits and losses. If one partner is unable to pay a debt the other partners will be accountable to pay.
Income Taxes – Taxed the same as a sole proprietorship. Each partner reports their earnings on their own personal income tax filing. The partnership itself is not taxed separately.
Longevity/Continuity – The partnership dissolves if one of the partners dies or decides to quit for any reason. If there is a buy/sell agreement in place the remaining partners may purchase that partners shares from him/her or their heirs.
Control – All partners have equal control of the business unless otherwise stated in the articles of partnership.
Profit Retention – All profits are divided equally between the partners unless otherwise stated in
Part A
Sole Proprietorship: A sole proprietorship is owned by only one person. All profits and losses are the responsibility of the owner only.
Liability – There is unlimited liability in a sole proprietorship. The owner is solely responsible for any debts that may occur.
Income Taxes – The business files taxes as one single unit. Because profits are not shared, they are considered personal income to the sole proprietor.
Longevity/Continuity – In a sole proprietorship if the owner dies or quits, the business dies as well. The only exception would be if the owner states in his or her will that the business can continue.
Control – The owner has complete control in a sole proprietorship.
Profit Retention – The owner retains all profits.
Convenience/Burden – The owner can start doing business as soon as they like. If the owner wishes to operate under a fictitious name a D.B.A (Doing Business As) will need to be filed. Some forms of business my require permits or licenses.
General Partnership: A business owned and operated by two or more people that share gains and losses.
Liability – There is unlimited liability in a general partnership. The owners/partners are responsible for all profits and losses. If one partner is unable to pay a debt the other partners will be accountable to pay.
Income Taxes – Taxed the same as a sole proprietorship. Each partner reports their earnings on their own personal income tax filing. The partnership itself is not taxed separately.
Longevity/Continuity – The partnership dissolves if one of the partners dies or decides to quit for any reason. If there is a buy/sell agreement in place the remaining partners may purchase that partners shares from him/her or their heirs.
Control – All partners have equal control of the business unless otherwise stated in the articles of partnership.
Profit Retention – All profits are divided equally between the partners unless otherwise stated in