Forms of Business Organization

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Forms of Business Organization a) Sole Proprietorship This is in basic terms a business entity or enterprise owned and perhaps managed by a single individual. Characteristics of a Sole Proprietorship Liability. In terms of liability, the owner of the business is in this case liable in his individual capacity for the debts of the business. Income Taxes. In regard to income taxes, owners of this form of business use their own personal tax returns to report their income as well as expenses. Organizational Continuity and Longevity. In this case, the demise or disability of the owner terminates the business. Control. The owner in this case has absolute control of the business enterprise. He or she is the sole decision maker. Profit Retention. There is no profit sharing in this case like is the case in a partnership. The owner enjoys all the profits alone (Miller and Jentz, 2009). Convenience or Burden. This form of a business is not a legal entity. For this reason, it is required to comply with minimum regulatory requirements. Advantages of a Sole Proprietorship To begin with, this form of business is relatively easy to start (Miller and Jentz, 2009). The sole owner in this case only needs to comply with minimal legal formalities like seeking the appropriate licenses and permits (state and local). Unlike a partnership form of business, a sole proprietor is free to make decisions without consulting others. As he or she remains the sole owner of the business,
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