Report Assignment Example | Topics and Well Written Essays - 1500 words

Report - Assignment Example aster has full freedom to take decision or actions, it can be easily formed as no legal formality is required, sole traders is the only legal entity of this business form, no legal restrictions for sole traders apart from setting up any particular kind of business, and the continuity of this form is based on life, good health or death of the owner. A sole proprietor is liable for all of the debts, and even possesses liability in account of any injuries caused due to business. The profit is retained entirely by the sole owner. The sole proprietor pays income tax on the total business income. It is the easiest form to set up a business but requires legal paper work for local licenses for a suitable state, and if the owner sets up the business in someone else’s name it than requires a business license. The main disadvantages of such a form is limited financial resources, limited managerial capability, uncertainty in continuity of the business, unlimited liability makes the person al properties of the owner at risk, and is not suitable for large scale business (Cross, 1928). General partnership is a form of partnership where the business partner has unlimited liability. The partners have unlimited personal liabilities and are liable and can be sued for any partnership obligations. The profits are passed from divided amongst the partners according to agreement without any restriction. The partners have equal authority and rights in taking any managerial decision or action. Dissolution of partnership occurs when the relationship of the partners gets terminated due to various reasons such as death, bankruptcy or expulsion of a partner, which indicates impossibility to conduct such partnership business. The convenience is that it requires low volumes and cheap paper work for registration, but the burden of additional funds at cheaper price still remains even that the number of investors is more in this form. The main advantage is that it can increase the amount of funds