Orchard Park Secondary School **We aren't endorsed by this school
Mar 30, 2023
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Business Structures Sanel A sole proprietorship is a type of business which is owned and operated by one person, yourself, as business is a self employed type of business, which you are responsible for the businesses operations and liabilities. A great example of sole proprietorship is an artist, as they are individuals who work on their own, and make their own music. In comparison with a partnership type of business, this is owned by 2 or more people, which the partners will be able to split up the responsibilities for the operations and liabilities of the business. An example of partnership is Co—Branding, which is when 2 business join for marketing purposes, as Red Bull and GoPro have. The difference between a sole proprietorship and a partnershiptype of business, is that a sole proprietorship is run by yourself so you choose how to operate and you are the only one who faces the consequences of liability. Whereas, a partnership is run by 2 people so you are able to split up the tasks to complete which makes it faster to run your business. Having a partner is also helpful as running a business alone may seem stressful since you can't ask for help, but with a partner you will have mutual support and companionship. How does a sole proprietorship respond to taxes? According to the economic perspective, A sole proprietorship type of business responds to taxes by paying the personal income tax on the net income generated by the business. How does a partnership respond to taxes? According to the economic perspective, The benefits of a partnership is that the partners do not have to pay income tax on the profit split between them, which is one of the tax advantages included with a partnership business. Due to the fact that each partner must disclose their own profit and loss on their tax filings. The economic perspective on both types of business show that a sole proprietorship has a negative, as the single owner has to pay personal income taxes on the profits received from their business. Whereas, a partnership type of business benefits, as they do not have to pay income tax, and they are able to keep their full profit.
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