Submitted by: Submitted by bposse
Views: 338
Words: 1228
Pages: 5
Category: Business and Industry
Date Submitted: 11/13/2011 07:50 AM
Sole Proprietorship vs. Partnership
Introduction
School Pride is name of a prospective business venture that will specialize in producing memorabilia and clothing for junior high and high school students and faculty members. School Pride will target local schools initially, and hopes to expand its market with the addition of a web site. Prior to going into business, the creator of School Pride is contemplating whether to go into business as a sole proprietor or as a partnership. There are advantages and disadvantages to being a sole proprietor or a business partner. Each must be taken with great consideration to determine which avenue is best for the business and its owner.
Sole Proprietorship
Many new businesses begin as a sole proprietorship. A sole proprietorship business is one that is owned by one person and is usually the individual who maintains the daily responsibilities for running the business. The sole proprietor owns all of the assets of the business and keeps all of the generated profits. In addition, the owner is also responsible for all of the liabilities and debts the company accrues. Sole proprietorships are also easier to ascertain as the owner only needs to obtain the required licenses, tax identification numbers, and have the certifications to begin business operations. (Poznak, n.d.)
The financial statements associated with a proprietorship are fairly standard. They usually include the balance sheet, income statement, statement of cash flows and statements of changes in owners’ equity. (Roberts, 2011) Sole proprietors also have the benefit of not being double-taxed; meaning that all income generated by the business is taxed as personal income to the owner.
Advantages of sole proprietorship
* Sole proprietorship is the least expensive form of ownership of a business.
* Maintains total and complete control of the business.
* All generated income from the business is kept or reinvested by proprietor.
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