Lit 1 Task 1
Sole Proprietorship is a business owned by one person, as distinguished from a partnership or
Corporation. Sole proprietorship is a company, which is not registered with the state as a limited liability company or corporation.
Some advantages of a sole proprietorship are that they have flexibility in operations. The sole proprietorship business is undertaken on a small scale. If any change is required in the operations, it is easy and quick to bring the changes. Another advantage in this type is the ease of promptness in decision-making, autonomy. When the decision is to be taken by one person, it is guaranteed to be quick. Thus, the entrepreneur, as a sole proprietor, can arrive at quick …show more content…
Each partner has the opportunity to act as the company representative; if the other partner(s) cannot make it, an individual partner has the power to make a decision for the company. As a result, the rest of the team has to deal with the repercussions of the decision made. The major disadvantage of a general partnership is in the event that the death of a partner occurs the partnership automatically ends, unless a ownership transfer plan has been funded and is implemented.
Limited partnership is a limited partnership occurs when two or more individuals agree to start a for-profit business. A limited partnership must consist of at least one limited partner and at least one general partner Specific advantages are tax benefits, the profits and losses in a limited partnership flow through business partners. They are each taxed on their personal income tax returns. The limited partners in the relationship get to share in the profits and losses, but they do not have to participate in the business itself. Also, a limited partner's liability for the partnership's debt is limited to the amount of money or property that individual partner contributed to the partnership.
C Corporation is a corporation that elects to be taxed as a corporation. The C corporation pays federal and state income taxes on earnings. When the earnings are distributed to the shareholders as dividends,