Task 1

Task 1 Part A

Sole Proprietorship

This type of organization is owned by a single individual. One person is in charge of all of the business decisions and operates from personal funds. A sole proprietor is not required to go through a legal department in order to approve any contractual deals that may arise.

Characteristics

Liability: In a Sole Proprietorship, the owner is subject to unlimited liability. They are personally held liable for all of the debts the business may incur. Income Taxes: A Sole Proprietorship would be responsible for the business taxes that are levied on the business. They pay taxes once a year, and would report the income on their own personal tax filing. Control: The business owner would be responsible for all of the control in this type of organization. He or she would not have to relinquish control to any outside parties, and they would be solely responsible for the decisions made for the business. Profit Retention: All profits go directly to the business owner in a sole proprietorship. He or she would have no partners or shareholders to divide the money between and would be able to pocket any profit. Expansion: Since all of the business making decisions fall squarely upon the shoulders of the sole proprietor, they would be able to relocate or expand without having to consult any other party. Compliance: The owner of the sole proprietorship is solely responsible for ensuring that the business is in compliance with all reporting and other regulatory laws and requirements.

Advantages and Disadvantages

The main disadvantage of a sole proprietorship would be the difficulty with which funds can be raised for the business. All start ups require a working capital, and it can be hard for a sole proprietor to come up with the capital needed to start and/or maintain the business. Another disadvantage to having a sole proprietorship would be that the owner is subject to unlimited liability, therefore any debts the business occurs would be...