Lit 1 Task 1 and 2

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Part A Sole Proprietorship: A type of business that is owned by and run by one person with no legal difference between the business and the owner. It is easy to form with no cost or time to initiate. It gives the owner the ability to self-govern the business. There are drawbacks; only one owner can be established not allowing a partner. Also, unlimited liability puts the owner’s personal assets in jeopardy with the creditors. · LIABILITY – The owner is held responsible for all debts and expenses accrued by the company via the concept of unlimited liability. If the expenses and debts aren’t satisfied, the owner of the business can be sued for breach of contract. · INCOME TAXES – The IRS views all income generated by the business as…show more content…
· PROFIT RETENTION – All losses and profits are shared equally, unless their agreement states otherwise. · LOCATION – Texas mandates that if a partnership is doing business under a name that doesn’t include the surnames of the partners; an assumed name certificate must be filed in the same county as the business premise. In the event, there is no set premise for operations; an assumed name certificate has to be filed in all counties of operation. ("Selecting a business," 2012) · CONVENIENCE or BURDEN – General partnerships are easy to establish and dissolve. All partners share gains, losses, and all liabilities. Limited Partnership: This partnership consists of a blend of both general and limited partners. This kind of agreement/partnership lets the general partner manage the entire operation, but they are still fully liable for debts. The limited partner only invests his/her money, and can only lose what they invested. · LIABILITY – The general partner has unlimited liability, while the limited partner is typically liable for the investment that he contributes. · INCOME TAXES – This partnership is not subject to federal income tax. All earned and lost income from this business is taxable on the individual’s tax return. · LONGEVITY/CONTINUITY –If the general partner dies or withdraws then the business is liquidated unless there was a buy/sell agreement stating otherwise. In the event that the limited partner perishes his appoint heir
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