01 -- Proprietorships and General Partnerships

01 -- Proprietorships and General Partnerships - CPA BEC...

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CPA BEC - STUDY UNIT 1 Proprietorships and General Partnerships: Core Concepts A. Sole Proprietorships 1. The sole proprietorship consists of one individual engaged in any kind of business. It is not distinct from its owner and is not a separate legal entity. The sole proprietorship is easy and cheap to create. Most filing, registration, and attorneys’ fees are avoided. It is formed at the will of the proprietor. a. A major weakness is that it cannot raise equity capital other than the personal resources of the proprietor. b. The proprietor has the advantage of receiving all profits. (S)he has the disadvantage of unlimited personal liability . The income/loss of the business is reported by the proprietor. The proprietor receives the tax benefits of all business deductions and losses. c. Operation of the sole proprietorship is flexible. The proprietor has authority to make all management decisions. The duration of the sole proprietorship is at the proprietor’s discretion. d. It is automatically terminated upon the proprietor’s death. B. General Partnerships 1. Definition. A partnership is “an association of two or more persons to carry on as co- owners of a business for profit.” 2. In a general partnership, each partner has unlimited personal liability for all losses and debts of the business. 3.
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This note was uploaded on 08/29/2010 for the course CBEAM BEC taught by Professor Gleim during the Spring '10 term at De La Salle Lipa.

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01 -- Proprietorships and General Partnerships - CPA BEC...

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