This essay focuses on a sole proprietorship.One of the functional advantages of sole proprietorships is that they are easier to set up than other business entities. A person becomes a sole proprietorsimply by running a business.
Week Sixteen – Chapters 40, 41 & 42 Explain the three principal forms of business organizations – proprietorships, partnerships (LLPs and LLCs), and corporations. List the duties of partners to one another. Explain the advantages of a limited liability company The text and materials needed for this class: Twomey and Jennings: Business Law. 5th Edition. Principles for Today’s Commercial Environment. Mason Ohio: South-Western, Cengage Learning 2014 (ISBN: 978-1305575158).
One of the functional advantages of is that they are easier to set up than other business entities. A person becomes a sole proprietorsimply by running a business. Another functional advantage of a sole proprietorship is that the ownermaintains 100% control and ownership of the business. By definition, a sole proprietorship can have only one owner, and that owner is entitled to the profits and controlof the business. Business also have tax advantages over other businessentities. Under Virginia income tax law, s do not require separate tax filings.
Sole Proprietorships also have liability and functional disadvantages compared to other business entities. The biggest disadvantage of a sole proprietorship is the potential exposure to liability. In the owner is personallyliable for any debts or obligations of the business. This means that lawsuit claimants or creditors may have access to the owner’s personal accounts, assets, or property if any business accounts cannot cover his debt. While the limitation on ownership can be a functional advantage for an owner, it can also be a disadvantage. If an owner of a sole proprietorship wishes to include another owner, he must dissolve the sole proprietorshipand form a new business entitysuch as a general partnership. There is one exception to this otherwise firm rule –an owner can be a “co-sole proprietor” with his spouse.