Lit Task 1 a&B Essay

2055 Words Aug 15th, 2013 9 Pages
LIT1 – Task 1 (Part A)

Sole Proprietorship: * Single Ownership - The single individual always owns sole proprietorship form of the business. The individual owns all assets and properties of the business and bears the risk of losing or gaining from the business. * No Sharing of Profit – The business is owned by an individual, therefore, all of the gains are directly available for the owner to access immediately. There is no friction between owners * One Man’s Control - The controlling power in a sole proprietorship always will be the owner. However, the owner is free to consult to whomever he/she likes. * Unlimited Liability - The liability of the sole proprietor is unlimited. This implies that, in case of loss the
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C-Corporation: * Limited Liability - Unlike partnerships and sole proprietorships, corporate shareholders are not liable for any of the corporation's debts. * Adding Investors and Selling an Interest - To add new investors or sell an interest, the transacting parties simply exchange shares. Absent a shareholders' agreement to the contrary, there is no requirement that the other shareholders agree to the transfer, and there is no way that the other shareholders can withhold any of the benefits of stock ownership from the new shareholders. * Taxation – This type of business is exempt from Federal Taxes * Formation and Cost - Corporations require a greater investment than most other business entities, except for perhaps a partnership or a limited liability company. * Create and Dissolve Corporation – It is not easy to build or dissolve a C-Corporation. * Management and Control - According to law, day-to-day management of a corporation rests with the officers appointed by the board of directors, who are ultimately responsible for the management of the corporation. The board of directors is elected by the votes of the shareholders. * Location – Formation in multiple states is fairly simple, it involves filing and paying necessary fees. * Convenience/Burden - Since the business is taxed separately from it’s owners it increases administrative ease. C-Corps are not easy to dissolve * Distributions – Any distribution from the

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