WGU LIT1 Task 310.1.2-01-06
Part A (The Report)
Sole Proprietorship
A sole proprietorship is the most common form of forming a business in the United States. The individual that forms the sole proprietorship and the business is one in the same. For example, if the business owes creditors money, the individual who created the sole proprietorship business has to pay the bill. When entering into contracts the individual is actually agreeing to the contract since the person and business is one in the same.
The biggest advantage of doing business under a sole proprietorship is that it is extremely easy to form since the individual creating the sole proprietorship is the business. They are fully responsible for all aspects of the business including making good on payments, collecting monies from customers, and providing the goods or services to their clients. Another reason individuals create sole proprietorships is the flexibility they gain by owning their own business. Since they do not have anybody to report to they can do as they please as far as hours, vacations, expansion, or direction of the business.
However, there are many disadvantages that come with a sole proprietorship business. Since the individual is the business they are responsible for all financial responsibilities. They are responsible for ensuring all payments to creditors are paid on-time and in full. If the individual runs into financial issues they are responsible without protection.
Also, sole proprietorships can only have one owner so you can’t bring others into the business. Likewise, they are unable to pass the business on to another individual. Tax planning can also be difficult for the individual since all income and debts for the company are also those of the individual.
Overall, it is very dangerous to do business as a sole proprietorship due to the liability of the owner.
1. Costs: Almost no creation cost since there is nothing to create.
2. Longevity or Continuity of the Organization: A sole proprietorship
Sole Proprietorship
A sole proprietorship is the most common form of forming a business in the United States. The individual that forms the sole proprietorship and the business is one in the same. For example, if the business owes creditors money, the individual who created the sole proprietorship business has to pay the bill. When entering into contracts the individual is actually agreeing to the contract since the person and business is one in the same.
The biggest advantage of doing business under a sole proprietorship is that it is extremely easy to form since the individual creating the sole proprietorship is the business. They are fully responsible for all aspects of the business including making good on payments, collecting monies from customers, and providing the goods or services to their clients. Another reason individuals create sole proprietorships is the flexibility they gain by owning their own business. Since they do not have anybody to report to they can do as they please as far as hours, vacations, expansion, or direction of the business.
However, there are many disadvantages that come with a sole proprietorship business. Since the individual is the business they are responsible for all financial responsibilities. They are responsible for ensuring all payments to creditors are paid on-time and in full. If the individual runs into financial issues they are responsible without protection.
Also, sole proprietorships can only have one owner so you can’t bring others into the business. Likewise, they are unable to pass the business on to another individual. Tax planning can also be difficult for the individual since all income and debts for the company are also those of the individual.
Overall, it is very dangerous to do business as a sole proprietorship due to the liability of the owner.
1. Costs: Almost no creation cost since there is nothing to create.
2. Longevity or Continuity of the Organization: A sole proprietorship