Lit1 310.1.2-01-06

In: Other Topics

Submitted By Amtytus
Words 3366
Pages 14
Ashley T

LIT1 Task 310.1.2-01-06

Part A

Sole Proprietorship – As a sole proprietor, you are your own business entity. You own and run your company, which means you are in complete control and assume sole responsibility of all legal and financial matters.
• LIABLITY – There is no differentiation between the business and the owner, as they are one in the same. Therefore the business/owner takes full accountability and has limitless liability for all gains and losses the business obtains.
• INCOME TAXES – All business revenue and overhead are considered personal income and have to be reported as such to the IRS on taxes as they cannot be taxed separately.
• LONGEVITY/CONTINUITY – The business is only in existence while the owner is actively running it. Should the owner retire or pass, the business ceases to exist.
• CONTROL – Since the business has one sole owner, it cannot be passed on to another individual for control.
• PROFIT RETENTION – The business/owner retains all revenue.
• LOCATION – You are not restricted on where you can operate your business. Depending on the states you expand to, you will be required to register your business with the state agency so it is known who is liable for any incidences. However, if you decide to use your name as the company name, most states will not require any registration. You just need to check with the state agency for their policies.
• CONVENIENCE/BURDEN – The business can be established just by doing business. As long as you follow state requirements based on the industry of your business, i.e. permits, registration and licensing, the business is formed as soon as you start conducting it. With that being said, there is no distinct difference between the business and the owner as they are the same, so you are 100% liable, both legally and financially for any issues.

General Partnership – A…...

Similar Documents

Rwt1 Task 318.2.2-01-05, 2.3-06 Bob Lotich (2011) California’s New Anti-Affiliate “Amazon Tax” Law. Retrieved from: www. The potential impact of online sales. Bill Siwicki (2012) Sales from mobile devices double in December. Retrieved from: Harry Wallop (2011) Online clothing sales double. Retrieved from: double.html Joseph Galant (2011) Ebay Forecasts 2011 Revenue That May Exceed Estimates. Retreived from: estimates-on-paypal-service-shares-advance.html Julianne Pepitone (2011) Amazon sales jump 51% Stock surges. Retrieved from: Requirements for a successful online marketing campaign. Rebecca Gill (2011) Successful Internet Marketing Begin With Goals. Retrieved from: campaigns-begin-with-goals/ Biana Babinsky (2009) Make Marketing Easier – Defgine Your Target Market. Retreived from: Hubert Hopkins (2009) How Much Should Your Company Spend on Internet Marketing? Retreived from:......

Words: 2893 - Pages: 12

Lit1 Task 310.1.2-01-06

...Part A (The report) Part B (The memorandum) Student Name Western Governors University Part A (The report) Determining what type of business venture to either start or invest in can be challenging. Over the next several pages we will evaluate the various types of business organizations and at the end of this report; you should have an initial or better understanding of the different types of business forms. Sole Proprietorship: The word proprietorship can sound intimidating. It is important to remember that most things are simplified with knowledge. If your business is a sole proprietorship then you as an individual are the owner and operator of that business. This means the sole proprietor handles everything from setting up the business, which does not require an attorney to establish the business and you only have to report the name of your business if you choose to operate under a name other than your own. Then you need to register your business with the government. • Liability: All liability resides with the owner of the company and even their personal property could be implicated in a situation where the company fails due to poor market conditions, business strategy or if someone is injured as the result of company products or other. The person that owns the business is liable for all aspects of the business and could be drawn into legal actions based on outcomes of liability situations. • Income Taxes: The sole proprietor also reports all......

Words: 2854 - Pages: 12

Lit1 Task 310.1.2-01-06

...Part A The Report Sole Proprietorship This is the most common form of business. The business and the owner are the same. That means all debts and liabilities are the responsibility of the owner. The advantage of this form of business is that it is so easy to start. Basically, you just start selling stuff or providing a service. Of course, if permits or special licenses are needed, you still have to get those. The disadvantage is that you can't bring in a partner because there can only be one owner. Liability: The owner is personally liable for all losses, debts, and liabilities. Income taxes: There is no difference between the business owner and the business, all income earned by the business is the same as personal income to the owner. Longevity or continuity of the organization: Duration of the business is dependent on the owner. If the owner becomes dies or becomes incapacitated, the business will normally cease to exist. Control: The owner has complete control over all decisions regarding the business. Profit retention: All profits and losses pass through to the owner and are taxed only once at the individual tax rate which enable them to keep more of the profits. Location: A sole proprietorship is easily expanded or moved to another state. A DBA needs to be registered in each state, along with filing taxes in each state if required. Convenience or burden: No permission from anyone is needed to form a sole proprietorship. There are no extra tax......

Words: 1635 - Pages: 7

Lit1 Task 310.1.2-01-06

...Part A (The Report) Sole Proprietorship A sole proprietorship is the most common form of forming a business in the United States. The individual that forms the sole proprietorship and the business is one in the same. For example, if the business owes creditors money, the individual who created the sole proprietorship business has to pay the bill. When entering into contracts the individual is actually agreeing to the contract since the person and business is one in the same. The biggest advantage of doing business under a sole proprietorship is that it is extremely easy to form since the individual creating the sole proprietorship is the business. They are fully responsible for all aspects of the business including making good on payments, collecting monies from customers, and providing the goods or services to their clients. Another reason individuals create sole proprietorships is the flexibility they gain by owning their own business. Since they do not have anybody to report to they can do as they please as far as hours, vacations, expansion, or direction of the business. However, there are many disadvantages that come with a sole proprietorship business. Since the individual is the business they are responsible for all financial responsibilities. They are responsible for ensuring all payments to creditors are paid on-time and in full. If the individual runs into financial issues they are responsible without protection. Also, sole proprietorships can only have one......

Words: 3869 - Pages: 16

Lit1 Task 31012-01-06

...For anyone who wishes to start their own successful business, there are a lot of important factors to be considered in order for that to happen. The main factor is how the business is intended to be conducted, and characteristics such as liability, taxation, continuity, profit retention and sharing, and the conveniences and burdens associated with the business. It is important for a potential business owner or owners to be educated on the different types of business organizations and rules and regulations involved in order to select the entity that best meets their business needs. Sole Proprietorship The first and most common form of business organizational structure is known as a sole proprietorship. Not only is it the most common, but it is also the simplest form of business organizational structure to establish. The primary characteristic of a sole proprietorship is that it is simply owned and operated by one person. When operating a business as a sole proprietor, the business also operates under the name of the person who is considered the owner of the business. If one were to declare an actual name for the business other than that of the owner’s name, then the business would include the term “Doing Business As,” or simply, D.B.A. An example of this would be, John Doe D.B.A. John’s Landscaping Service. This way, one can see that it is John Doe who is the sole proprietor, but also chooses to use John’s Landscaping Service as an official name for the business. In......

Words: 3695 - Pages: 15

Lit1 Task 310.1.2-01-06

...proportionate to their interest in the company. Taxation of an LLC would be directly on income after expenses, which means the members’ liability would be limited to their actual investment. In addition, only corporate assets would be subject to any potential claims from creditors. This form of business would exempt you from personal liability (Forms of Business Organization, n.d.). The start-up costs will be slightly higher than a partnership but you will find that this minimal increase will outweigh the benefits of an LLC over a partnership. Please let me know if you have any questions or concerns so I can address them. References Forms of Business Organization.pdf (n.d.) Retrieved on May 9, 2011, at  LIT1 Legal Issues in Business Organizations course of study, module Distinguishing Between Business Form. ...

Words: 2406 - Pages: 10


...LIT1 Task 310.1.2: Organizational Forms Sole Proprietorship-This is a company in which the owner and the company are basically one in the same. This is the most basic and simplest company to form. Many people use their own name or a DBA, but all liability lies with the owner. * Liability-In this form of business the owner is responsible for all actions of the company personally. There is no protection of assets or future earnings. This also includes the actions of any employees. * Income Taxes-Taxes are filed one time by the owner with his or her personal taxes. Sole proprietorship has the lowest tax rate of all form of business. * Longevity or Continuity of the Organization-A sole proprietorship may remain open as long as one would like. * Control-The owner has total control over the company and its assets. * Profit retention-The owner controls all monies of the company and personally responsible for the finances therefore the owner retains all profit of the company. * Location-When you expand into a new state it is simple to register with that state using your name or a DBA. Income and sales tax will need to be paid in accordance with the laws in which the stat it is earned in. * Convenience or Burdon-The owner is ultimately responsible for all aspects of the business. This includes compliance with state and local laws and the general survival of the company. General Partnership-This type of company is similar to a sole proprietorship but......

Words: 1680 - Pages: 7

Lit1 310.1.2-01-06

...Part A (the report) SOLE PROPRIETORSHIP: This business entity is the most common business used in the United States. This entity is owned and ran by one individual where there is no legal distinction between the owner and the business. This legal name of the business is the owner’s name; however, the business may operate under a fictitious name by filing a DBA. This person is legally accountable for all elements of the business including finances, loans and debts. One of the advantages of doing business as a Sole Proprietorship is that it’s easy to create. Another key advantage is the autonomy. Since the owner or individual is the business, he or she may decide for themselves whatever business decision they feel is needed to make, including the business finances. Some disadvantages would be that it is impossible to bring in others to do business being there can only be one owner. This also makes it difficult to raise capital in terms of seeking investors. Tax planning can also be challenging for the sole proprietor. Since there is no legal distinction between the owner and the business, all the income generated by the business is treated as ordinary personal income to the owner. • Liability: Sole Proprietors have unlimited liability. There is no difference between the owner and the business. Therefore, the owner is personally liable and responsible for all the business obligations and debt. Doing so makes all of the owner’s personal assets reachable to creditors. •......

Words: 3092 - Pages: 13

Lit1 Task 310.1.2-01-06

...LIT1 Task 310.1.2-01-06 PART A Sole Proprietorship - This is considered one of the most common forms of business in America. There are advantages and disadvantages in being a sole proprietor. An advantage would be that you, as the sole proprietor, are your own boss. In contrast a large disadvantage would be that you, as the sole proprietor, are completely liable for every aspect of the business. * Liability: Sole proprietorships have what is considered to be one of the biggest risks when it comes to liability in that they have unlimited liability. Unlimited liability means the sole proprietor is ultimately responsible if the business fails, this would include debts. * Income taxes: legally there is no dissimilarity in the proprietor and the business, so all the organizations income is taxed as if the owner were working like an ordinary person. * Continuity of the organization: Sole Proprietorships will only last as long as the owner is alive. If the owner dies so does the business, so any employees that the owner had would be left to find other means of employment. * Control: Control of a sole proprietorship lies solely in the owner’s hands, he/she has complete discretion of what direction the business will go or even if the business will continue or not. * Profit retention: The profits from the business go completely to the owner, and would not be shared with any employees. However, this also ties to the financial aspect of the business. If......

Words: 2103 - Pages: 9

Lit1 Task 1

...Lit1 Task 310.1.2-01-06 Part A Determining whether to start or invest in a business endeavor and what kind of business endeavor to choose can be challenging. Through this report the numerous types of business organizations will be assessed. By the end of the report you should have a greater comprehension of the different choices available. * Sole Proprietorship: To start off it is essential to have a clear understanding of what sole proprietorship means. As the sole proprietor you are the owner and the operator of that business. In more detail, the sole proprietor manages everything including setting up the business. An attorney is only needed if the sole proprietor plans to report the name of the business under a name other than their own. In that instance they would need to register the business with the government. * Liability: A full understanding of all liability and where it falls is very important. All liability falls on the owner on the company. This means that not only all of the company’s assets but also the owner’s personal belongings possibly will be occupied in any scenario where the company fails. More specifically, in the event that the company flops because of unfortunate market settings, poor business policy or if there is an injury suffered implicated by company products. The liability falls on the owner of the company including all characteristics of the business and can be brought into any legal actions. * Income Taxes: As a sole......

Words: 2781 - Pages: 12

Lit1 Task 310.1.2-01-06

...1) A Sole Proprietorship is: A. Easy to create, allowing sole proprietors to start their business. B. Able to allow sole proprietors to allocate profits from the company. C. Able to control all aspect of their business, from the company's location and financials to sales and marketing. D. Not required to file taxes, passing the company's profits and losses to their personal income tax return. E. Not required to file dissolution documents with the state in order to dissolve the company. F. Solely owned and proprietors and do not share profits from their businesses. Profit retention allows sole proprietors to use their money as they please. G. An Unlimited Liability because if it fails, creditors can go after both their personal and business assets. They can also be held personally liable for any injuries or property damage incurred by a customer while on their premises. 2) A General Partnership is: A. Liable for all of the partnership debts. B. Is easy to create, allowing partners to start a business quickly. C. Flexible as the partners govern the business in whatever manner they see fit. D. Less expensive to maintain than a corporation. E. Tax friendly as partnerships are not subject to federal income tax on the income earned. F. A financial liability as partners can make investments from their personal finances and the investment is then owned by all partners. 3) A Limited Partnership Is: A. Able to take......

Words: 1211 - Pages: 5

Lit1 Task 310.1.2-01-06

...PART A (the report) Sole Proprietorship: is an unincorporated business that is owned by one person, the sole proprietor. An advantage of a sole proprietorship is that there are very few formal requirements for the creation, operation, and termination of the business. The sole proprietor may employ as much or as little capital as he or she sees fit and run the business as they so desire. Additionally all the profits are those of the sole proprietor. With that stated, the losses are also those of the sole proprietor. Since there is no separation in the legal entity between the proprietor and the business, all personal assets become attached to the debt of the business. Another disadvantage can come at the time, or untimely of death of the proprietor. There is no automatic continuation of the business. The business becomes part of the owner’s estate and can become subject to probate and “death tax”. • Liability- You risk everything, there is no legal separation between the business and the individual owner. The owner risks all assets, home, car, everything in his/her name. Unlike a corporation, sole proprietorships have unlimited liability and the proprietor is legally responsible for all debts. • Income Taxes- All business related income or losses must be reported on the owner’s personal income tax return. The business is not separately taxed. Deductions are allowed for business expenses in the same manner as any other type of business. The...

Words: 3037 - Pages: 13

Lit2 Task Lit1 310.1.2-01-06

...To: Business Owner From: Justin Lugar Date: November 4, 2015 Subject: Business Form Recommendation It seem as though the you are looking for a couple distinct business characteristics for improving areas of concerns you have for your, so far, promising business venture. Since you are now operating in a sole proprietorship, which allows business and personal finances to be one in the same, one worry is not having enough liability coverage to protect your personal assets/finances in unforeseeable lawsuits. Another concern is the being able to raise enough investments in capital assets to be capable of expanding your business. Right now you are not being double taxed, meaning at the corporate level as well as the personal level. Since there is a sole proprietorship going on taxes are only taken out at the personal level, saving you, as the owner, a substantial amount of profit. It is likely that this is one benefit you would like to keep in order to maximize your earnings. Based on the type of business you are seeking to operate I would recommend changing from the sole proprietorship to a Limited Liability Company (LLC) and I will explain why. To sum up what Http:// states, the LLC offers the members (owners) protection from business liabilities that might be incurred. This means that they are not personally liable for paying any of the company’s debts beyond what they have invested in the company....

Words: 905 - Pages: 4

Lit1 Task 310.1.2-01

...LIT Task 310.1.2-01-06 Part A 1. Sole Proprietorship – the simplest form business. The business is owned and operated by one person and there is no legal distinction between the business and its owner. The owner of a sole proprietorship assumes all responsibilities, liabilities and profit of the business. • Liability- One major disadvantage of a sole proprietorship is the liability. As a sole proprietorship both the owner and business are one and the same and therefore both are subject to any unpaid debt. If the business has debt that is unpaid then the owner has the same unpaid debt and creditors could go after the individual. The same for if the owner has debts separate from the business the creditors could go after the business. As a sole proprietorship business, liability insurance could be purchased to help abate the liablity. • Income Taxes- As a sole proprietorship business, there is no double taxation as associated with a C-corporation. A sole proprietorship business deducts business expenses on a Schedule C of their personal Taxes. A disadvantage of a sole proprietorship is you will be taxed on total profits of the business and be subject to self-employment tax. • Longevity/Continuity- The longevity of a sole proprietorship business is the life span of its owner. If the owner dies without selling or passing the business on to a relative the business no longer exists. • Control- An advantage of the sole proprietorship is that......

Words: 2685 - Pages: 11

Lit1 – Task 310.1.2-01 Through 310.1.2-06

...LIT1 – task 310.1.2-01 through 310.1.2-06 Business Forms Sole Proprietorship – Sole proprietors are individuals doing business on their own. They have no partners or shareholders. A sole proprietor may have a free-standing business where he works or he may be a contractor or freelancer and travel as near or far as he pleases. If he chooses to move to another location or State, he can continue his business there. Some advantages to this type of business are that the sole proprietor makes all business decisions, has creative control and keeps all of the profits (or can reinvest them). He also saves the expense of creating a partnership or corporation. There are no forms to fill out if you are a sole proprietor: you decide to start a business and you do it. There is no legal obligation to become incorporated. Another advantage is that there are no special tax forms to fill out; the sole proprietor fills out a standard IRS 1040 form and includes his business earnings as Schedule C. Disadvantages that may come up in a sole proprietorship include not having enough capital to start or continue the Sole Proprietorship or not having the time to spend with friends and family due to a heavy workload. If the sole proprietor has employees, he may have difficulty retaining them due to the benefits offered by corporations that may be nearby. The sole proprietor is also the sole person responsible in the case of a lawsuit and is personally liable for any debt. A large court......

Words: 2386 - Pages: 10