LIT1 Task A
SOLE PROPRIETORSHIP:
• LIABILITY – The owner and the business are considered as one and so the owner has unlimited liability for the business. Therefore the all of the owner’s personal assets, the business’s assets and the business’s future earnings may be at risk.
• INCOME TAXES – All income for the business goes on the owner’s personal income tax returns whether federal, state or local. One advantage of the sole proprietorship is that the business is not a separate entity and therefore is only taxed once on this income, and another advantage is that all business liabilities may be written off as expenses to offset income. Asset depreciation is an example of this.
• LONGEVITY/CONTINUITY – Once the …show more content…
Just like the sole proprietorship, the partnership is 100% liable and creditors may go after business assets, or personal assets of either or both partners.
• INCOME TAXES – Taxed like a sole proprietor where each partner pays taxes on their income from the business like it was there personal income, and expenses may be written off to offset business expenses. Since the partnership is also not considered a separate entity, the business is taxed only once.
• LONGEVITY/CONTINUITY – Once a partner exits the business or dies, it is dissolved and a new business form must be created in order for the business to continue operating.
• CONTROL – Partners have equal control in all decision making and operations of the business. However this can be contractually modified.
• PROFIT RETENTION – Profits are divided according to each partners share in the business. Losses are also shared amongst the partners according to their …show more content…
The C Corporation will have to incorporate in each state that it operates in as required by the laws of each state.
• CONVENIENCE/BURDEN – The convenience of a Corporation is its ability to raise money by simply selling shares. The burden of the Corporation is its complex reporting and double taxation.
S-CORPORATION
• LIABILITY – The liability of an S Corporation is similar to the C Corporation. It is limited to shareholder investment in the same way. However, it is also subject to the “Piercing of the Corporate Veil”.
• INCOME TAXES – In an S Corporation, the Corporation pays no income taxes, and income is flowed through in the form of salaries and dividends to the shareholders.
• LONGEVITY/CONTINUITY – An S Corporation, like a C Corporation, also continues regardless of loss of owners or shareholders, unless it expires by contract or is dissolved.
• CONTROL – An S Corporation is controlled by a Board of Directors who are elected by shareholders. The Board of Directors may also elect officers to run the day to day operations of the
SOLE PROPRIETORSHIP:
• LIABILITY – The owner and the business are considered as one and so the owner has unlimited liability for the business. Therefore the all of the owner’s personal assets, the business’s assets and the business’s future earnings may be at risk.
• INCOME TAXES – All income for the business goes on the owner’s personal income tax returns whether federal, state or local. One advantage of the sole proprietorship is that the business is not a separate entity and therefore is only taxed once on this income, and another advantage is that all business liabilities may be written off as expenses to offset income. Asset depreciation is an example of this.
• LONGEVITY/CONTINUITY – Once the …show more content…
Just like the sole proprietorship, the partnership is 100% liable and creditors may go after business assets, or personal assets of either or both partners.
• INCOME TAXES – Taxed like a sole proprietor where each partner pays taxes on their income from the business like it was there personal income, and expenses may be written off to offset business expenses. Since the partnership is also not considered a separate entity, the business is taxed only once.
• LONGEVITY/CONTINUITY – Once a partner exits the business or dies, it is dissolved and a new business form must be created in order for the business to continue operating.
• CONTROL – Partners have equal control in all decision making and operations of the business. However this can be contractually modified.
• PROFIT RETENTION – Profits are divided according to each partners share in the business. Losses are also shared amongst the partners according to their …show more content…
The C Corporation will have to incorporate in each state that it operates in as required by the laws of each state.
• CONVENIENCE/BURDEN – The convenience of a Corporation is its ability to raise money by simply selling shares. The burden of the Corporation is its complex reporting and double taxation.
S-CORPORATION
• LIABILITY – The liability of an S Corporation is similar to the C Corporation. It is limited to shareholder investment in the same way. However, it is also subject to the “Piercing of the Corporate Veil”.
• INCOME TAXES – In an S Corporation, the Corporation pays no income taxes, and income is flowed through in the form of salaries and dividends to the shareholders.
• LONGEVITY/CONTINUITY – An S Corporation, like a C Corporation, also continues regardless of loss of owners or shareholders, unless it expires by contract or is dissolved.
• CONTROL – An S Corporation is controlled by a Board of Directors who are elected by shareholders. The Board of Directors may also elect officers to run the day to day operations of the