WGU LIT1 Task 1
Part A
Sole proprietorship
Sole proprietorships are the most common type of business in the U.S. They are most commonly chosen because they are the easiest type of business to set up and give the sole owner of the company complete control of the company. There are many benefits to a sole proprietorship in regards to control, profit retention, and convenience. In regards to control, the owner of a sole proprietorship has the final say in any decisions. Due to the fact that there are no shareholders or other partners, the owner can make decisions regarding the direction of the company without having to answer to any other parties. If the owner wants to expand the company or move the business the owner has the ability to do so at any time. Profit retention is also a big benefit to having a sole proprietorship. All profits from the company belong to the owner alone since the owner and company are considered to be the same person. The owner is able to use company profits for any use he deems necessary as he would with his own money. Any bank accounts belonging to the company would be the property of the owner even if they were in the businesses name. Sole proprietorships are also the most convenient companies to own. Sole proprietorships are not required to produce profit reports or name officers. Sole proprietorships are not able to bring in partners or have shareholders, therefore removing the disadvantage of having to negotiate the sharing of profits or dispersal of dividends.
There are some downsides to owning a sole proprietorship that make this an imperfect type of business. Some of the downsides of this type of business are liability, income taxes, and longevity of the business. Liability is a major issue in a sole proprietorship due to the fact that the company and the individual are considered the same entity. This means that the owner of the company is liable for any and all debts the company may accrue and is liable for any lawsuits brought
Sole proprietorship
Sole proprietorships are the most common type of business in the U.S. They are most commonly chosen because they are the easiest type of business to set up and give the sole owner of the company complete control of the company. There are many benefits to a sole proprietorship in regards to control, profit retention, and convenience. In regards to control, the owner of a sole proprietorship has the final say in any decisions. Due to the fact that there are no shareholders or other partners, the owner can make decisions regarding the direction of the company without having to answer to any other parties. If the owner wants to expand the company or move the business the owner has the ability to do so at any time. Profit retention is also a big benefit to having a sole proprietorship. All profits from the company belong to the owner alone since the owner and company are considered to be the same person. The owner is able to use company profits for any use he deems necessary as he would with his own money. Any bank accounts belonging to the company would be the property of the owner even if they were in the businesses name. Sole proprietorships are also the most convenient companies to own. Sole proprietorships are not required to produce profit reports or name officers. Sole proprietorships are not able to bring in partners or have shareholders, therefore removing the disadvantage of having to negotiate the sharing of profits or dispersal of dividends.
There are some downsides to owning a sole proprietorship that make this an imperfect type of business. Some of the downsides of this type of business are liability, income taxes, and longevity of the business. Liability is a major issue in a sole proprietorship due to the fact that the company and the individual are considered the same entity. This means that the owner of the company is liable for any and all debts the company may accrue and is liable for any lawsuits brought
References: Mancuso, A. (2013). Qualifying to do business outside your state. Retrieved from http://www.nolo.com/legal-encyclopedia/qualifying-do-business-outside-state-29717.html Lau, T., & Johnson, L. (2013). The legal and ethical environment of business. (1st ed., p. 11.2-11.5). Flat World Knowlegde, Inc.