WGU LIT1 Task 1 Essay

3621 Words Oct 29th, 2013 15 Pages
Part A
Sole proprietorship
Sole proprietorships are the most common type of business in the U.S. They are most commonly chosen because they are the easiest type of business to set up and give the sole owner of the company complete control of the company. There are many benefits to a sole proprietorship in regards to control, profit retention, and convenience. In regards to control, the owner of a sole proprietorship has the final say in any decisions. Due to the fact that there are no shareholders or other partners, the owner can make decisions regarding the direction of the company without having to answer to any other parties. If the owner wants to expand the company or move the business the owner has the ability to do so at any
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When splitting the profits in a general partnership you are also splitting the income tax that needs to be paid. Depending on the profits of the business this may drop you into a lower tax bracket than if a single person had filed for all of the profits. This also drops the amount of income tax paid by each person resulting in lower individual taxes paid.
General Partnerships are not without their disadvantages. Without being an incorporated company the owners are still subject to issues such as liability, control, and location issues.
Many believe that liability is a biggest issue in a general partnership than in a sole proprietorship. The owners of the company are still fully liable for any debts the company may accrue as well as the liability for any lawsuits that may be brought against the company. However, the bigger issue in a partnership is that now each partner can be liable for the other partner’s actions. If one partner is sued for malpractice, the other partner may suffer because of it.
In a general partnership there is also the issue of control. Whereas in a sole proprietorship the sole owner has full control in the business, in a general partnership the control is split equally between the partners. This can lead to issues when the partners do not agree on the direction they want to take the company in regards to growth or other

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