Lit1 Task 1 Essay

2041 Words Apr 16th, 2013 9 Pages
Peter Nero
LIT1 –Task 1

A1a: The Sole Proprietorship is the most common business form in the U.S. It offers the advantages of no-cost, easy startup, and full owner/operator autonomy with regard to business decisions.
· Liability: The owner/operator of a Sole Proprietorship is subject to full and unlimited financial liability for the business. The owner and the company are legally the same entity. The company’s assets are legally the same as the owner’s personal assets.
· Income Taxes: The owner of a Sole Proprietorship pays taxes in the earnings of the company as personal income.
· Longevity/Continuity: Because the owner of a Sole Proprietorship and the business, are legally one and the same, when the owner of the business
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· Location: Limited partnerships have to be formed in compliance with individual state laws. As long as the partnership is legal in a given state, the partnership may do business.
· Convenience/Burden: Limited Partnerships have extra requirements placed upon them to comply with state regulatory requirements. They must maintain a registered agent to represent them in the state in which they were formed. They are also required to file an informational report with the IRS of the profits passed to the general partners.

A1d: A C-Corporation is a business form in which the ownership and the company are seen as legally separate entities.
· Liability: Ownership of a C-Corporation is vested in its stockholders, whose liability is limited to the amount of their investment. The Corporation is liable for all of its debts, and for the actions of employees acting as agents of the organization. Creditors may lay claim against corporate assets, but cannot reach stockholders’ personal assets. Additionally, stockholders have no claim against corporate assets.
· Income Taxes: The Corporation pays both state and federal taxes on its earnings. Excess earnings may be shared with stockholders in the form of dividends, on which the stockholder then pays taxes.
· Longevity/Continuity: C-Corporations can have a perpetual existence. The deaths of stockholders and employees will not cause it to cease operation. However, a stockholder vote can be called to close the

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