Sole Propriortiship

Sole proprietorship is a form of business where an individual is fully and personally responsible for all the obligations of the business, and is entitled to all of its profits. For example, salons, small restaurants, etc. The person who owns this type of business is called as a sole proprietor. The Sole proprietor (is personally responsible for all debts, taxes, liabilities and claims made against employees or clients. Any income that is earned from the business is considered sole proprietor's income. The sole proprietor reports business income and expenses on his or her own tax return. This means that the net income from the business is taxed only once. Sole Proprietorship is the easiest and least expensive form of business organization to organize. Sole proprietors are in complete control, and within the parameters of the law, may make decisions as they see fit. Sole proprietors receive all income generated by the business to keep or reinvest. A negative aspect of being a sole proprietor is having unlimited liability and are legally responsible for all debts against the business. Their business and personal property are at risk. The owner often finds difficulties in raising funds.

Partnerships are a form of business where two or more persons join their money and skills in creating the business. Most people enter into a partnership by having a written partnership agreement prepared. Partnership agreements are a document stating the terms of the partnership for the protection of each partner. This partnership agreement typically expresses the personal rights of the partners, the liabilities of the partners, and the rules of the partnership. This agreement also covers what happen when a partner dies or and legal issues occur, how the profits and losses should be divided, and what happens when a partner would like to leave the partnership. There can be a minimum of 2 partners and a maximum of 20. There are three types of partnership as summarized in paragraphs below.

-General Partnership

Partners divide responsibility for management and liability, as well as the shares of profit or loss according to their agreement. Equal shares are assumed unless there is a written agreement that states in a different way.

-Limited Partnership

This form of ownership is not often used for operating retail or service businesses. Forming a limited partnership is more complex and formal than that of a general partnership. General partner and limited partner are two basic types of partners in limited partnership. General partners are those who are responsible for the day-to-day management of activities, whose individual acts, is binding on all the partners, and who are personally responsible for the partnership's total liabilities. Limited partners are those who contribute only money and are not involved in management decisions and whose liability is limited