WGU LIT1 Task 310.1.2-01-06

3823 Words16 Pages
Part A (The Report) Sole Proprietorship A sole proprietorship is the most common form of forming a business in the United States. The individual that forms the sole proprietorship and the business is one in the same. For example, if the business owes creditors money, the individual who created the sole proprietorship business has to pay the bill. When entering into contracts the individual is actually agreeing to the contract since the person and business is one in the same. The biggest advantage of doing business under a sole proprietorship is that it is extremely easy to form since the individual creating the sole proprietorship is the business. They are fully responsible for all aspects of the business including making good on…show more content…
One issue with general partnerships is how to value a partner’s share of the business. Most times when the articles of partnership contract is agreed they will include a buy/sell agreement that contains details of a withdrawing member of the partnership. General partnerships are very similar to sole proprietorships in which they carry unlimited liability. This is one major drawback to a general partnership. If one member is fiscally responsible, but another is found of a wrongdoing, the other partner could be liable for their bad practices. Members do not have any protection from others bad acts or poor financial judgment. 1. Costs: Relatively no cost involved in creating a partnership business. Any cost would be associated with forming the articles of partnership contract. 2. Longevity or Continuity of the Organization: Once the agreement of the partnership ends, the partnership ends. Any remaining partners can keep the partnership going if they so wish to. 3. Raise Capital / expand business: In raising capital a partnership has the same difficulties as a sole proprietorship has in that in raising any capital has to come from the partners. 4. Control: The control of a partnership is between the partners. 5. Expand ownership: It is nearly impossible to expand a partnership due to the agreement between the members. 6. Taxes: The partnership is taxed the same as a sole proprietorship is. 7. Liability: A general partnership is similar to a sole proprietorship in

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