Wgu Lit Task 1

Part A

Business Organizations

SOLE PROPRIETORSHIP: A Sole Proprietorship is a business owned by one person. The business is unincorporated and usually (but not always) has fewer than 8 employees. Since the business is owned by one individual, all responsibility lies with this one person.

• Liability: The Sole Proprietor has unlimited liability which is not shared with anyone else. This means that in the event of bankruptcy or lawsuit the Proprietor’s personal assets can be seized.

• Income taxes: The Sole Proprietorship and the owner are taxed as a single unit. This means the owner simply files a 1040 and specifically a Schedule C which is a profit/loss statement. There are portions of income that can be written off as business expenses including equipment depreciation and any services such as a mobile phone used for business purposes.

• Longevity: The Sole Proprietor and the business are not considered separate, thus the business will end when the individual either discontinues the business, becomes disabled, or dies. While occasionally there may be a provision in the individual’s will for the continuation of the business this is difficult to follow through with. For all intents and purposes the individual is the business.

• Control: The Sole Proprietor has the luxury of answering to her or himself. The Sole Proprietor has total control of how the business will be run.

• Profit retention: 100 percent of the profits will go to the Sole Proprietor (aside from taxes of course.)

• Location: The Sole Proprietor is free to move the business to another location as long as the proprietor obtains the necessary licenses and permits for their respective profession. For example an attorney must be licensed to practice law in a specific state.

• Convenience or burden: The Sole Proprietor has the ultimate responsibility for getting work done. Since all liability rests with the owner all problems become the owner’s personal responsibility to...