Wgu Lit1 Task 2 Essay

Longevity/Continuity: Because the owner of a Sole Proprietorship and the business, are legally one and the same, when the owner of the business

A sole proprietorship is a form of business that is owned by a single individual.  • Liability – Due to the lack of legal distinction between the owner and the business, the owner is fully responsible and liable for all debts that the business incurs in the same manner that an individual is fully responsible and liable for all debts that they incur. There is no legal distinction between the assets of the owner of the sole proprietorship and the business; this means that creditors have the ability to come after the owner’s business and personal material assets.   Income Taxes – Since the business is the same as the owner of the sole proprietorship, all profits or losses from the business are filed by the

Liability- The general partner would be liable for all unlimited responsibility on all tasks and debt, while the limited partner will not loss more than their investment.

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.

a partners that might end or dissolve partnership. One of the main drawbacks of a

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

disagreements will happen (is not when it happens). Everyone that runs a business always has his or

Liability All liabilities are the responsibility of each partner. In the event of litigation, any creditors can go after the personal assets of each partner to recover any debt owed. But since liability is spread out between the owners, one may feel less risk is being taken. 2. Income Taxes General partnership may also benefit from pass-through taxation, meaning the partners are taxed like sole proprietors. Business income is reported on the personal tax filing while business losses can be deducted to reduce personal tax liability. The partnership itself is not subject to federal income tax. However the partnership needs to file an information return utilizing the IRS Form 1065. 3. Longevity or continuity of the organization Once the partnership agreement is fulfilled, the general partnership may dissolve. A buy/sell agreement may be included in the articles of the partnership to allow the

Longevity/Continuity- A sole proprietorship exits only as long as the owner is alive or until the owner decides to

• CONTROL – Limited partners are not allowed to make any decisions concerning the operation of the business in which they have invested in.

General Partnership: Occurs when two or more individuals get together to operate a business with the intention of making profit. Each individual is a general partner of the business and all profits and losses are shared between the partners. General partnership agreements can be a written or verbal agreement.

Consequently, all partners may also be bound by the contract and liable for damages cause by a breach. If partnership assets do not completely satisfy damages for a breach, a creditor can look to the personal assets of the partners to satisfy the balance, unless the parties have previously agreed otherwise, usually in the contract.

A sole proprietorship is the simplest and most common structure chosen to start a business. It is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses and liabilities.

Longevity: Similar to a sole proprietorship, in case of death or incapacity of a partner the

Expand ownership: It is nearly impossible to expand a partnership due to the agreement between the members.