Lit1 Task a Essay

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LIT1: Task 310.1.2-01-06
Task A

Sole proprietorship 1. Liability * An owner has unlimited liability both personally and as the company owner. Liability is a disadvantage in a sole proprietorship. 2. Income taxes * The owner is responsible for filing taxes and is allowed to file taxes as part of their personal income taxes. 3. Longevity * This depends completely on the owner and there continued ability to operate the business. The operation of the business can be significantly affected if the owner becomes sick or dies. 4. Control * The owner has complete control of the business. The owner is totally responsible for all decisions pertaining for business operations. 5. Profit retention * The owner …show more content…
6. Location * Laws regulating the corporation including taxation laws can vary from state to state. There are applications and fees that need to be filed to move a C corporation. 7. Convenience/burden * Shareholders can be from other countries allowing for more opportunity for investors. C corporations can dictate their own fiscal year.
S-Corporation
1. Liability * There is limited liability for the shareholders. They are not held liable for actions of the corporation. 2. Income taxes * There is no double taxation for an S-Corporation. Shareholders file profits and losses on their personal tax returns with the corporation not responsible to pay taxes on the same profits. This is referred to as pass through taxation. 3. Longevity * The longevity of the company is not affected when a shareholder sells their share of the company or dies. 4. Control * The control of the corporation is managed by an elected board of directors. The officers in the company normally have to be approved by the board of directors before they are offered a position to lead the company. Shareholders are the owners of the company and that ownership transfers with the buying or selling of stock. 5. Profit retention * The profits are shared among shareholders. Their profit is based on the performance of the company. The shareholder receives dividends on the percentage or number of shares

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