Wgu Lit1 Task 2
| Sole Proprietorship | Description | In a sole proprietorship, the business and single owner are one in the same. A single owner makes all decisions with regard to the business and the single owner retains all profits earned by the business. The single owner is also responsible/liable for all debts and obligations of the business on a personal level. | Two Advantages | A sole proprietorship is easy to create; there is minimal creation cost and time.The single owner has autonomy in decision making; sole owner makes all decisions related to the business and has complete ownership of business’s finances. | Two Disadvantages | It is impossible to add additional owners and to pass on business, business dies with owner. A single owner
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| Income taxes | The business itself does not file a tax return. There is no legal distinction between owners and the business; all income earned by the business is considered personal income of the owners. An informational tax return is filed by the business, which states income, losses and deductions for each partner and each partner pays personal income taxes on that portion. | Continuity of the organization | The original partnership has no continuity. Should an original owner die, the business may be continued with remaining partners and is reconstituted in the articles of partnership, resulting in a new partnership being formed (the original partnership ceases to exist). | Control | All partners have an equal voice in managing the business, unless otherwise specified in the partnership agreement. | Profit retention | The business itself does not retain any profits; profits pass through to the partners. All profits are split between partners equally, unless otherwise agreed upon in partnership agreement. |
| Limited partnership | Description | A limited partnership is a business that has both partners, a general partner and a limited partner. A limited partnership must have at least one of each, a general and a limited partner, but may have more. | Two Advantages | For the limited partner, liability is limited to the amount of the initial investment. General partner(s) retain all control of the business.