This website uses cookies to ensure you have the best experience. Learn more

Lit1 Task 1 Essay

3996 words - 16 pages


The three basic legal forms of businesses in the United States are Sole Proprietorships, Partnerships, and Corporations. However, each of these forms can have variations and a hybrid called a limited liability company can be formed in all US States that exhibit the characteristics of both a partnership and a corporation (American College, n.d.). The following are some of the forms of business existing in the United States and their characteristics:

a. Sole proprietorship
b. General partnership
c. Limited partnership
d. C-corporation
e. S-corporation
f. Limited Liability Company

This report contains an overview of some of the ...view middle of the document...

The income and expense of the business is reported in the personal tax return of the sole proprietor. The form used by the Sole Proprietor is Form 1040 together with the Schedule C or the Profit or Loss from Business or Profession. The business profit of a sole proprietorship is treated as self-employment income, so salaries of the owner are not an expense item. Only salaries of employees and payroll taxes are allowed as business expenses (Perez, 2009).

Longevity or continuity of the organization: The life of the sole proprietorship is terminated at the death of the owner. Under state laws, all the business activities of a sole proprietorship will cease upon the death of the owner, except if the owner left a Last Will and Testament expressly stating that the business should be continued upon his death. Upon the owner’s death, whether the business is continued or not, the law provides that the representative of the owner must pay all of the personal and business debts of the owner out of the deceased assets.

Control: The sole proprietor has sole control of the business and it is his decisions that determine the fate of the business. Typically, the owner performs the managerial functions. Even if he hires others to run the business for him, he can decide to fire the manager or overrule his decisions anytime.

Profit retention: All the profits earned by the sole proprietorship becomes the personal income of the owner, so he can put in profits as additional capital or withdraw a portion or all of it. He can reduce his taxable income by charging expenses as costs of doing business.

Location: The sole proprietor uses Schedule C to report any profit or loss on his retail location or locations and attach it to Form 1040 (Smith, n.d.). Sole proprietors have to sell the entire business (including all assets and liabilities) to transfer ownership, but the buyer have to register the business under his own name.

Convenience or burden: A sole proprietorship is easy to start as they require no legal action to form. Generally, there are no formal requirements to operate this form of business except registering the business in the name of the sole proprietor if the business is known by a trade name. The owner usually manages the business, so small businesses can operate without worrying about paying a professional manager.

Advantages: The main advantage of the sole proprietorship is its simplicity and the minimal regulations that govern their formation and business operations. Usually, the business and personal income are combined in the sole proprietor’s tax returns and business losses are deducted from his gross income. Sole proprietorships can also be easily shut down upon the decision of the owner.

Disadvantages: The business owner he may lose his assets including his personal properties to pay creditors in case the business fails or incurs debts.

b) General partnership

A general partnership is a form of business...

Other Papers Like Lit1 Task 1

Wgu Lit1 Task 1 Essay

3434 words - 14 pages Criteria That Determine Corporations. (n.d.). Retrieved November 17, 2014, from WGU - LIT1 - Template flashcards | Quizlet. (n.d.). Retrieved November 17, 2014, from The memorandum TO: Clients and Friends of the Firm FROM: Nikki Lingo RE: SEC Rule 65243 DATE: November 24, 2014

Lit1 Task 1 Essay

2381 words - 10 pages Task 1 Part A SOLE PROPRIETORSHIP: • LIABILITY –From a legal point of view there is no distinction between the assets of the business owner and the business itself. Business assets can be used to pay personal debts and personal assets can be used to pay business debts as sole proprietorships are subject to unlimited liability. • INCOME TAXES – All income generated through sole proprietorships is considered ordinary

Beginning of Lit1 Task 1

748 words - 3 pages Sole Proprietorship: Sole Proprietorship is a very common form of small business organization. Benefits include having complete and total control as to how the business is run, marketing, hours, as well as the immediate dissolution of the business. Disadvantages range from personal liability for the business. A sole proprietor is also held responsible for all taxes for the business as personal income. Liability: A sole proprietor is held

Lit1 Sample

1099 words - 5 pages format for Task 1 Part A for LIT1, the Bullet/Listing approach (mentioned in the Task 1 Instructions) is below, which basically is you’ll describe each characteristic in usually about 1-2 sentences then move on. Example of how to apply this format: SOLE PROPRIETORSHIP: •         LIABILITY – (1-2 Sentence Description) •         INCOME TAXES – (1-2 Sentence Description) •         LONGEVITY/CONTINUITY – (1-2 Sentence Description

Lit1 - Corporations

2102 words - 9 pages       LIT1  –  Task  1  (Part  A)       Sole  Proprietorship:   • Single Ownership - The single individual always owns sole proprietorship form of the business. The individual owns all assets and properties of the business and bears the risk of losing or gaining from the business.   • No Sharing of Profit – The business is owned by an individual, therefore, all of the gains are directly available for

Lit1 - Task 2 - 310.1.5-02, 11, 13 0912

1046 words - 5 pages LIT1 - Task 2 - 310.1.5-02,_11,_13_0912 Family Medical Leave act of 1993 The Family Medical Leave act of 1993 (FMLA) ensures that personnel of companies with 50 or more employees, who work within a 75 mile radius of those in need of the leave, are able to take time off in order to balance their personal obligations with their employment commitment. An employee will qualify for family leave if • they need time off for a serious health

Lit1 Task1

2765 words - 12 pages LIT1 Task 1 Part A SOLE PROPRIETORSHIP: A business that is owned by one person and is not incorporated. Sole proprietorships are easy to start. You don’t need a lawyer and you don’t need to register with the government except to obtain a business license or permit where required. * Liability: The owner is liable for all debts incurred by the business. His personal property can be attached. He

Lit1 Wgu Task A

4472 words - 18 pages LIT1 Task 1 Part A (the report) SOLE PROPRIETORSHIP: A sole proprietorship is the simplest, quickest and cheapest form of business to start making it the most popular types for first time business owners. A business owner and a sole proprietor may operate under different names, but legally, they are the same entity. Which leads to one of the biggest disadvantages of becoming a sole proprietor; the owner is responsible for all debts and fault

Freedom And Responsibility

2141 words - 9 pages very next day, tables were placed in front of the Administration building. On October 1, Jack Weinberg, who was running the CORE (Congress on Racial Equality) table, was arrested by campus police after he refused to state his name and hand over his student card. As they brought a car to the plaza to take the limp Jack Weinberg, the students spontaneously surrounded the cop car and deflated the tires to keep the car from leaving campus. For 32 hours

Hate Crime Laws

2348 words - 10 pages facial bones broke and he fell backward onto the pavement, cracking his skull and dislocating his brain from the brain stem. Kennedy was taken off life support later that day. Moller was initially charged with his death, but the charges were reduced to manslaughter without the hate crime attachment, and he was sentenced to only 5 years. With good behavior and other benefits, Moller served a little over 1 year for the death of Sean Kennedy (Algren

Rational Emotional Behavior Therapy Case Study Conceptualization And Treatment Plan

2140 words - 9 pages -Behavior Therapy, 26(2), 63-88. Ellis, A. (2000). Can rational emotive behavior therapy (REBT) be effectively used with people who have devout beliefs in God and religion. Professional Psychology: Research and Practice, 31 (1), 29-33. Jones, S.L., & Butman, R.E. (1991). Modern psychotherapies: A comprehensive Christian appraisal. Downers Grove, IL: InterVarsity Press. Lega, L.I., & Ellis, A. (2001). Rational emotional behavior therapy (REBT) in

Related Essays

Lit1 Task 1 Essay

2575 words - 11 pages LIT1 Task 1, Part A Sole proprietorship: A sole proprietorship is an inexpensive and easy to form business organization. This entrepreneurship gives the owner the ability to have flexibility in their schedule. The business owner of this organization will benefit from having full control and retains all the businesses profits. Negatively, the business owner is also personally responsible for all the debt. and liability the business may

Lit1 Task 1 Essay

2877 words - 12 pages Legal Issues for Business Organizations – LIT1 Task 1 Legal Issues for Business Organizations – LIT1 Task 1 – Part A The way a business is organized is an important part of the business’s structure. “Different organizations provide different advantages and disadvantages in creation cost and simplicity, ongoing maintenance requirements, dissolution and continuity, fundraising, managerial control, public ownership, tax planning, and

Lit1 Task 1 Essay

1742 words - 7 pages Steve Wood LIT1 - Legal Issues for Business Organizations Task 1 Scenario A The purpose of the Family and Medical Leave Act of 1993 is to offer a balance between the stresses of both work and life. There are three main provisions of the act that are critical to the overall takeaway of what this law means to this situation. First, “Eligible employees can take unpaid, job-protected leave (they can return to their position). When they return from

Lit1 Task 1 Essay 1112 Words

1112 words - 5 pages Americans with Disabilities Act of 1990 (ADA) prohibits discrimination and ensures equal opportunity for persons with disabilities in employment ( The ADA is a very tricky act in that the lines of the law can be blurred. The disabled individual must be qualified for the job that he or she is applying for which means that the individual must meet the skill, experience, education or other requirements of the position. Title 1 of the ADA makes