Essay about Lit1 Task 1
LIT1 –Task 1
A1a: The Sole Proprietorship is the most common business form in the U.S. It offers the advantages of no-cost, easy startup, and full owner/operator autonomy with regard to business decisions.
· Liability: The owner/operator of a Sole Proprietorship is subject to full and unlimited financial liability for the business. The owner and the company are legally the same entity. The company’s assets are legally the same as the owner’s personal assets.
· Income Taxes: The owner of a Sole Proprietorship pays taxes in the earnings of the company as personal income.
· Longevity/Continuity: Because the owner of a Sole Proprietorship and the business, are legally one and the same, when the owner of the business …show more content…
· Location: C-Corporations have to be formed in compliance with individual state laws. Articles of Incorporation must be filed with the Secretary of State, typically in the state where the principal place of business is located. The corporation must register as a foreign company with all other states in which it does business.
· Convenience/Burden: C-Corporations have extra legal requirements placed upon them to comply with state regulatory requirements and financial reporting. To meet these requirements the corporation may pay fees for incorporation, out-of-state registration, bookkeeping, taxes, and attorneys’ fees. Corporations are generally regarded as being more legitimate businesses.
A1e: An S-Corporation is a strictly regulated form of corporation used primarily by small businesses.
· Liability: Ownership of an S-Corporation is vested in its stockholders, whose liability is limited to the amount of their investment. The Corporation is liable for all of its debts. Creditors may lay claim against corporate assets, but cannot reach stockholders’ personal assets.
· Income Taxes: The S-Corporation pays no state and federal taxes on its earnings. All earnings are passed to stockholders, and taxed as