Essay about WGU LIT1 Task 1

3600 Words Oct 3rd, 2013 15 Pages
Part A
Sole proprietorship
Sole proprietorships are the most common type of business in the U.S. They are most commonly chosen because they are the easiest type of business to set up and give the sole owner of the company complete control of the company. There are many benefits to a sole proprietorship in regards to control, profit retention, and convenience. In regards to control, the owner of a sole proprietorship has the final say in any decisions. Due to the fact that there are no shareholders or other partners, the owner can make decisions regarding the direction of the company without having to answer to any other parties. If the owner wants to expand the company or move the business the owner has the ability to do so at any
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This may lead to restrictions on expansion and or even lead to extra paperwork that needs to be filled out in each state. In a general partnership, since the partners are also liable for income tax, this may even lead to paying extra taxes in the states where business is done.
Limited Partnership A limited partnership is very similar to a general partnership; however, one of the partners is only involved in the business in a limited sense. In this type of partnership there are still general partners and at least one limited partner. The difference between the types of partners is the amount of control and liability the partners share.
As with a general partnership, the general partners are subject to full liability for the debts of the company, however, the limited partner is only liable for the amount of his investment of the company. This offers some protection to the limited partner in cases where the general partners would have none.
Limited partners are eligible for a portion of the profits of the company. This portion is usually spelled out in the articles of partnership when it is formed. One benefit of being a limited partner is that if the limited partner dies, their executor is entitled to a buyout of their share in the company. However, unlike with a general partner, if the limited partner dies, this does not immediately end the partnership for all partners. This ensures

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