Sole Proprietorship Essay - Part 4
Liability- Owner is liable for 100% of debts, taxes and liabilities - Sole Proprietorship Essay introduction. Income Taxes- Taxed like regular income tax; owner claims it at year end and pays income tax on all earnings. Longevity/Continuity- Company will likely die off if owner does. The company, being one and the same as the owner, cannot continue without measures being taken to pass on Control- Owner has complete control over all decisions made; complete autonomy Profit Retention- All profit belongs to owner
Location- The only reason location is an issue is filing for local and state permits based on the business type; may pick up and move when and wherever owner desires. Would need to file a DBA form if owner is operating under a different name Convenience/Burden- Limited financial availability; family income disappears after death of owner; only one sharing the burden of running business General Partnership Liability- Partners share all profits but are completely liable for all debts associated with the partnership, just as one would with a sole proprietorship
More Essay Examples on Corporation Rubric
Income Taxes- Taxes are paid as personal income tax; similar to that of a sole proprietorship, income is split up per their agreement and then taxed accordingly. No federal taxes will be imposed, as this is a pass through entity, only personal income tax will be taken Longevity/Continuity- Once a partner dies, partnership is immediately dissolved and partners may choose to regroup. Control- Any partner can make decisions for all partners; if one partner enters into a contract with a third party, the entire partnership is liable for any and all promises made and is responsible for seeing the contract through.
Profit Retention- Partners share in all profit and losses based on contract percentages Location- Business may move or open a new storefront as long as partners are in agreement at the named percentage in the contracts. Partnership may move as long as a new DBA is filed in the new state. Convenience/Burden- Having the help and support of other partners helps to relieve the stress of having to be personally responsible for every action necessary for the company.
Because there are more people that are able to enter into a contract, being help accountable for someone else’s actions may prove to be frustrating. Limited Partnership 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. Income Taxes- Taxes are paid as income tax, unless the limited partnership is classified as a corporation by the IRS for tax purposes.
In order to keep from being taxed this way, you would have to stick solely to the contract as written, and keep away from operating outside of the agreement. Longevity/Continuity- The partnership would keep operating outside of the limited partner’s death, as per usual, however, if a general partner dies, and the agreement hasn’t covered the possibility of their death and also agreed that the business will keep running past the death of a general partner, the partnership will immediately dissolve.
Control- A limited partner has no say in the running and management in the business. The general partners will have the ability to run the business as they see fit. Profit Retention- Profit is split between partners, usually between a set on agreed percentage. Location- Similar to the General Partnership, the Limited Partnership may be moved to another state easily. A new DBA filing must be made in the new state. Convenience/Burden- As with a GP, the general partners are completely responsible for all liabilities and debts.
The limited partner, however, is not liable for anything beyond his/her original investment. C-Corporation Liability- Corporations are held liable for their own debts/etc.. However, because a corporation is a separate “person” according to the law, the shareholders/owners are not typically held personally liable for decisions and debts made. Income Taxes- Longevity/Continuity- A corporation may last forever. Being a separate entity allows the corporation to remain active and functioning, no matter who the shareholders, owners, officers and chiefs are of the business itself.