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LIT 1 Part A

SOLE PROPRIETORSHIP: Sole proprietorship is the easiest, fast and most common type of business structure to start. It is business that does not have a difference from the owner and the business. Responsible for all your business’s debts, losses and liabilities can even come after personal property. • LIABILITY: Owner has unlimited liabilities because there is no difference between the owner and the business. • INCOME TAXES: The taxes are taxed just like any other form of income. • LONGEVITY/CONTINUITY: There is no partnership and when owner dies the business die since they are one in the same. However the assets can be sold. • CONTROL: The owner makes all decisions, there is no partnership therefore no one else to have input. • PROFIT RETENTION: The owner is free to do as they please with all profits. No rules or restrictions. • CONVENIENCE/BURDEN: This is the most convenient business to set up. The only cost is the actual products needed to run the business. Licenses or marketing supplies or tools needed. • LOCATION: They are no rules only to follow the laws according the state/area you are operating out of. Licenses or taxes follow the state laws.

GENERAL PARTNERSHIP: General partnership is when people join together on a business and share all unlimited liabilities. Partnership can be done verbally or in a special agreement written out as an article of partnership, which can lay out all the details of the partnership. Like sole proprietor there is no difference between the partners and the business. They are legally one in the same. • LIABILITY: Each partner is liable for the partners’ obligations. If one partner does something illegal all partners can be help jointly responsible. • INCOME TAXES: A general partnership is taxed like a sole proprietorship. Partnership is a disregarded entity as far as

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