WGU LIT1 Task 1
A. SOLE PROPRIETORSHIP:
This is the simplest business structure of which the owner has total control. The owner can make up a fictitious name or use the same name for the business. Sole proprietorship is easy to set up at a minimal cost. The business owner does not need to follow rules or regulations of others but their own and can set up their own schedule. Proceeds can be directly deposited into the owner’s bank account and the funds are freely allocated between business and personal accounts.
The sole proprietor, however, is a subject of unlimited liability for debts, losses and other business obligations when the business goes sour. The business owner also faces challenges in raising capitals from investors because there are no stock options. Banks are reluctantly to make loans to these businesses due to the perceived lack of liability to repay the loans.
I. Liability: the business owner is held responsible and liable for all business debts and losses when business goes under. A creditor may also go after your business to satisfy the unpaid personal debts. Besides the debts, the sole owner is also responsible for any damages, injuries that occur as result of any omission or negligence of the business.
II. Income Taxes: the business owner doesn’t need to file separately for personal and business income tax returns. The business owner also can claim deductions on their business.
III. Longevity/Continuity: business existence depends on the owner. When the owner dies, the business dies.
IV. Control: the sole owner has the full control of the business from financing planning, personnel to projects and schedules. The sole owner is his or her own boss.
V. Profit Retention: Business proceeds translate into personal income for sole proprietorship. The owner can withdraw the funds for personal use or retain them in the business account. It is entirely up to the sole proprietor’s choice.
VI. Location: a sole proprietorship business can start anywhere at
This is the simplest business structure of which the owner has total control. The owner can make up a fictitious name or use the same name for the business. Sole proprietorship is easy to set up at a minimal cost. The business owner does not need to follow rules or regulations of others but their own and can set up their own schedule. Proceeds can be directly deposited into the owner’s bank account and the funds are freely allocated between business and personal accounts.
The sole proprietor, however, is a subject of unlimited liability for debts, losses and other business obligations when the business goes sour. The business owner also faces challenges in raising capitals from investors because there are no stock options. Banks are reluctantly to make loans to these businesses due to the perceived lack of liability to repay the loans.
I. Liability: the business owner is held responsible and liable for all business debts and losses when business goes under. A creditor may also go after your business to satisfy the unpaid personal debts. Besides the debts, the sole owner is also responsible for any damages, injuries that occur as result of any omission or negligence of the business.
II. Income Taxes: the business owner doesn’t need to file separately for personal and business income tax returns. The business owner also can claim deductions on their business.
III. Longevity/Continuity: business existence depends on the owner. When the owner dies, the business dies.
IV. Control: the sole owner has the full control of the business from financing planning, personnel to projects and schedules. The sole owner is his or her own boss.
V. Profit Retention: Business proceeds translate into personal income for sole proprietorship. The owner can withdraw the funds for personal use or retain them in the business account. It is entirely up to the sole proprietor’s choice.
VI. Location: a sole proprietorship business can start anywhere at