Sole Proprietorship: There is no legal difference between the Sole Proprietorship and the owner. They are easy to create and can mature as quickly or slowly as the owner wants. There can only be one owner and raising capital can be difficult, so they seek funding from financial institutions. ● Liability The Sole Proprietor is personally responsible for all debts and obligations. Creditors can claim personal assets of business owners and can sue if there is a breach of contract. Income Taxes All income rendered is treated as personal income for the business owner. Ordinary personal income has the highest tax rate, but there are different income takes rates depending on the type of income being taxed. Being able to plane to take
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It is simple and inexpensive to operate. But, partners are personally liable for business debts and liabilities. ● ● ● ● Liability Each person is personally responsible for all the debts of the partnership, that includes any debts incurred by partners on behalf of the partnership. Income Taxes General partners don’t pay taxes directly to the IRS, their revenue and expenses are included on their income tax returns at their individual rates. Longevity / Continuity Problems with partners and different goals among partners cna weekend and/or destroy the partnership. Control If there is no partnership agreement, each has an equal right to participate in the management and control of the business. Disagreements in the ordinary course of the partnership are decided by the majority of the partners. Profit Retention Profits and losses are passed through to the partners and taxed at their individual rates.
Location Expanding and moving is much like a sole proprietorship, in that you need to register to do business by filing a DBA in the new area. ● Convenience / Burden General Partnerships let many individuals merge assets and skills to help the company. The major burden is that the owners are accountable for whatever actions the company make. All partners may be responsible for finances and choices made by other partners. Limited Partnership: A form of partnership formed in compliance