LIT1 Task 1

B.S Accounting
A.
Business forms are categorized into six different organizations. These business forms make up proprietorships, partnerships, corporations, and Limited liability companies. All forms of business have characteristics descriptive of each business form. Identifying the characteristics of each business while accounting for the advantages and disadvantages will help to clarify each form of business.
1.
a. Sole proprietorship:
A sole proprietorship is a company formed with the ideas and direction of one individual. This type of company is formed on the basis on one individual. A company formed on individual ownership is formed with the understanding of not being incorporated. The success and failure of the company depends on one person. This type of proprietorship has the advantage of just being in one person’s hands. All the decisions are made by one person, all the profits goes to one person. A disadvantage of this type of proprietorship is that the individual has nobody to turn to when he needs help; the responsibility is in his hands. Business entity characteristics fall into seven categories which we will cover below.
Liability – There is no real line between business or personal liability and assets, they are the same in sole proprietorship. The outcome of success or failure is determined by the sole proprietor. Government does protect life insurance pay outs in case the business owner dies.
Income Taxes – Sole proprietorships have an advantage of filing taxes as single unit taxes. The profit that businesses earn is the personal income to the sole proprietor. Sole proprietorships file both their both personal and business taxes as one. Sole proprietorships can reduce their taxable income by calming business costs as a deduction when filing taxes.
Control – Sole proprietorship is owned by one person. All the decisions are made