Business Organizations Task 1 Part A
1. Sole proprietorship: This type of business is known to be the easiest business for an individual to develop. A sole proprietorship is owned by one person, who is the person that will make the decisions in regards to the business and does not share any responsibilities with anyone else as the business owner.
• Liability: One person is liable for the debts of this type of business, this will include their personal assets if necessary.
• Income Taxes: Sole proprietorship is taxed as a single unit. There is no separate federal return needed for taxes.
• Longevity or continuity of the organization: If something tragic were to happen to the owner of a ...view middle of the document...
The partners must submit individual tax returns, and disclose their share of profitable income with the appropriate forms.
• Longevity or continuity of the organization: Each individual business partner is responsible for their share of the business, including if they were to become deceased. The partnership will remain active until one partner fulfills their obligations, and folds their share of the business.
• Control: The partners have control over their business and decisions based on the business. Some general partnerships may have a contract in place providing one person more authority than the other.
• Profit retention: Under a general partnership, the amount of profits will depend upon the contract, if there is no contract in place then the partners split profits, as well as their losses.
• Expansion and location: Expanding and moving are easier tasks to accomplish with a general partnership, more so than a sole proprietorship, this being because there is more than one individual participating in the risks being taken.
• Compliance, convenience, and burden: Partners should agree and operate in coordination with an oral or written contract. The work load for a general partnership will vary depending upon the partners agreeing of the duties and obligations stated in the contract.
3. Limited Partnership: A limited partnership is a general partnership with investors. There are at least two individuals that develop a business (general partners). Once established, they seek investors to be a limited partner, whom are only responsible for what they have invested.
• Liability: The general partners of the organization still have the unlimited responsibility for the business as they do the day to day business. The limited partner is only putting the amount they invested at risk, and cannot lose more than that investment, their assets are still protected.
• Income Taxes: In the event that a limited partnership expands to much, it can be taxed as if it is a corporation.
• Longevity or continuity of the organization: In the event that a limited partner becomes deceased, the partnership is not diminished. The limited partners representative will receive the deceased persons portion.
• Control: With a limited partnership, the individuals in the general partnership still have the ultimate control over decisions of the company.
• Profit retention: The limited partner is only required to invest the amount that they choose. A limited partner is at risk because if the business folds, they will loose their investment.
• Expansion and Location: If this partnership were to decide to relocate, and or expand, depending on the contract, they will have to conference with their limited partners for a final decision.
• Compliance, Convenience, burden: Limited partners will receive annual reports on the business in order to stay informed on their investment. The general partners will be required to provide these documents.
4. C-corporation: This type...