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Part A (the report)
Forms of Business Organizations

SOLE PROPRIETORSHIP
A sole proprietorship is an unincorporated business entity owned by one person. A sole proprietorship is the most common form of business today.
· Liability: This is one of the largest disadvantages of a sole proprietorship. There is no distinction made under law between the proprietor and the proprietorship therefore the proprietor is one hundred percent liable. In the event that the business flops or is sued the business and personal assets of the proprietor including homes, bank accounts, vehicles, and equipment will be used to pay off outstanding debts. Future earnings are included the only income that is exempt from liability are life insurance monies left by the proprietor to his/her family.

· Income taxes: There is no difference under the law between a sole proprietor and the sole proprietorship, meaning that all business income is considered personal income of the proprietor. There is no double tax; all taxes are paid once by the proprietor since there is no separate reporting of federal income tax. The disadvantage to the tax situation is that the proprietors’ income from the proprietorship may cause the individual to enter a higher tax bracket and therefore pay more taxes. However a sole proprietor may decrease taxable income by writing off operating costs as expenses and most often this tax situation is advantageous.

· Longevity/Continuity: It is as easy to dissolve the business as it was to start, all the owner needs to do is finish any contracts, pay any outstanding debts and take on no further business. The ease of dissolution can be an advantage, however if the sole proprietor dies the business dies with him/her which is one of the disadvantages of this business form.

· Control: The owner of a sole proprietorship has complete control over all decisions made

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