Est 1 Essay
A business that is owned by one single person is called a Sole Proprietorship.
Being able to make decisions without consulting a “higher-up,” or any sort of partner in business is one of the main advantages of the Sole Proprietorship. The ability to file the business under the exact identity as the owner is a second advantage of this business form.
Since the business owner is a single person, he or she has to produce the funds for launching and maintaining the business and its operations. Eventual reliance on loans can consume a sole proprietor and the owner can accumulate a lot of debt. The owner’s personal assets and earnings could be comprised due to the “unlimited …show more content…
A1b. General Partnerships
When two or more individuals enter into an agreement to start a business it is called a general partnership. The responsibilities are shared and each of the involved parties may have differing roles within the business.
The greatest advantage of this type of business is that the partners receive and share all profits gained from the business. Another advantage is that the partnership is not required to pay federal taxes.
A disadvantage is that all parties involved in the partnership are held responsible and liable for the monetary aspects of the business as well as the legalities associated with the business. This can mean potential loss of the personal assets of the parties involved in the partnership.
Key Characteristics: • Liability - For any action taken directly against the business, each of the owners are liable. • Income Taxes - The IRS requires a general partnership to file a schedule K of the 1065 form. Although the partnership is not subject to pay federal taxes, the owners/partners are required to report business expenses, gains and