Lit Task 1

In: Business and Management

Submitted By tiaregomes
Words 1038
Pages 5
Tiare Gomes
Business Marketing Management
April 2013

Task 1 (310.1.2-01-06)

SOLE PROPRIETORSHIP: The Sole Proprietorship is a business owned completely and solely by one person. It is easy to start this type of business because legal formalities are minimal. Sole Props are popular amongst small businesses or start-ups because of this simplicity. Business taxes are done all under one filing (the owner files his taxes normally with the form 1040 and a schedule C) and all gains and profits belong to the owner alone without having to pay or share with shareholders or co-owners. This can either be a plus, or a minus depending on the situation. Because the owner has the right to all gains, he or she is also responsible for all liabilities as well. If the business goes under or goes into debt, then his or her personal assets are at stake. In addition, if the business owner dies unless there are pre-arrangements made in the form of a will, the business dies with the owner. More about the advantages and disadvantages to follow:

* LIABILITY: The owner is financially liable for everything with regards to the business, without limitation. If their business fails or falls into debt, the creditors can come after personal assets. * INCOME TAXES: The business owner and the business is taxed together. The business owner would file a 1040 with a schedule C along with it. All profits are considered personal income. On the bright side, all business items can reduce the taxable income by charging off costs as “expenses”. * LONGEVITY/CONTINUITY: If the business owner dies, then the business dies with him/her unless explicitly stated in the last will and testament. If the owner decides that he/she no longer wants anything to do with the business, then they can just close or resolve the business without having to consult with partners, or liquidate assets.…...

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