Lit Task 1 a&B Essay

Words: 2068
Pages: 9

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 the owner to access immediately. There is no friction between owners * One Man’s Control - The controlling power in a sole proprietorship always will be the owner. However, the owner is free to consult to whomever he/she likes. * Unlimited Liability - The liability of the sole proprietor is unlimited. This implies that, in case of loss the
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This will allow the business to continue upon death of a shareholder.

S-Corporation: * Type of Corporation – The S-Corp is a blend of a C-Corp and a partnership. S-Corps are formed much like a C-Corp and have a very similar structure * Taxation Consideration - Unlike a C-Corp, all income and losses of a S-Corp are attributed pro rata to the owners. This means that there is no ``double taxation" of corporate income like there is with the C-Corp. S corporation shareholder gets taxed on his or her share of the corporation’s profit. * Qualifications - need to meet certain guidelines to be eligible for S-Corp status. Almost any small business will meet these guidelines, however, so you can just let your accountant or attorney know that you want to form an S-Corp. * Create and Dissolve Corporation – It is not easy to build or dissolve a S-Corporation. * Liability – S-Corps protect personal assets by incorporation * Location – Formation in multiple states is fairly simple, it involves filing and paying necessary fees. * Convenience/Burden - Since the business is taxed separately from it’s owners it increases administrative ease. C-Corps are not easy to dissolve * Longevity – S-Corps can last a very long time since there is no individual ownership, the business is owned by shareholders. This will allow the business to continue upon death of a shareholder.