Lit1: Legal Issues for Bus.

In: Business and Management

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Legal Issues for Business Organizations

Sole Proprietorship The sole proprietorship is the most common form of business and has been around for many years. It is the simplest form of business because it is owned and operated by an individual. Some advantages to choosing a sole proprietorship would be minimal state and federal regulations, which make it easy to control and manage. Another is the cost to start a Sole Proprietorship is minimal. It is a good form of business for someone who is starting out small. In many cases this type of business can be operated out of the owner’s home. All business decisions are made by the owner, therefore he or she is entirely responsible for the operations, financial and legal aspects of the business. Some disadvantage to a sole proprietorship would be. The owner has unlimited liability and his personal wealth and assets are at risk to claims against the business. Another would be that raising capital is difficult for a sole proprietorship and is usually limited to the owner’s personal funds or credit available based on his personal credit history. Another key point to a sole proprietorship is that the business is not required to file or pay taxes. The sole proprietorship is a tax reporting entity, not a tax paying entity so the business taxes are filed at the personal rate of the owner on his personal income taxes.
Business Services Sole proprietorship (May 20, 2008). Retrieved on (March 9, 2010) from Iowa Secretary of State. http://www.sos.state.ia.us/business/sole.html

Key Characteristics • • • • The owner is completely and solely responsible for all liabilities of the business including debts and actions against the company. He has unlimited personal liability. Taxes are reported with the owner’s individual income tax return. The business lacks longevity because it is not a separate legal entity and usually ends with the…...

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