a) Discuss the nature of a Sole proprietor, apartnership and a public listed incorporated limitedliability company (corporation) in the light

of theabove statement Sole proprietorship A sole proprietorship , or simply proprietorship , i s a t y p e o f business entitywhich legally has noseparate existencefrom its owner. Hence, thel i m i t a t i o n s o f l i a b i l i t y e n j o y e d b y a corporationandlimited liability partnershipsdo not apply to sole proprietors. Alldebtsof the business aredebts of the owner. It is a "sole" proprietor in the sense that the owner has no partners. A sole proprietorship essentially means apersondoes businessin his or her own name and there is only one owner. A sole proprietorshipis not a corporation; it does not paycorporate taxes, but rather the personwho organized the business pays personalincome taxeson the profitsmade,makingaccountingm u c h s i m p l e r . A s o l e p r o p r i e t o r s h i p n e e d n o t w o r r y aboutdouble taxationlike acorporate entitywould have to.Most sole proprietors will register atrade nameor "Doing Business As".This allows the proprietor to do business with a name other than his or her legal name and also allows the proprietor to open a business account with banking institutions.

Advantages An entrepreneur may opt for the sole proprietorship legal structure becauseno additional work must be done to start the business. In most cases, thereare no legal formalities to forming or dissolving a business. A sole proprietor is not separate from the individual; what the business makes, so does theindividual. At the same time, all of the individual's non-protected assets (e.gh o m e s t e a d o r q u a l i f i e d r e t i r e m e n t a c c o u n t s ) a r e a t r i s k . T h e r e i s n o t necessarily better control or business administration possible with a sole proprietorship, only increased risks. For example, a single member, member managed LLC still only has one owner, who can make decisions quicklywithout having to consult others, but has the advantage of limited liability. IntheUnited Statesa sole proprietorship has the option of buying health carefor self-employed persons, such as aHealth Savings Account.Furthermore, in many jurisdictions, a sole proprietorship files simpler taxreturns to report its business activity. In theUnited States, f o r e x a m p l e , a sole proprietorship reports its income and deductions on a Schedule C on theindividual's personal return. To the IRS, a single member LLC is treated as adisregarded entity, and thereby, the owner of a single member LLC will stillr e p o r t i n c o m e a n d d e d u c t i o n s o n a S c h e d u l e C o n t h e i r i

n d i v i d u a l . I n comparison, an identical small business operating as an S Corporation or partnership would be required to prepare and submit a separate tax return. Aswith allflow-through entities, all of the profits and losses from the businessgo right to the owner. A sole proprietorship often has the advantage of theleast government regulations. Disadvantages A business organized as a trader will likely have a hard time raising capitalsincesharesof the business cannot be sold, and there is a smaller sense of l e g i t i m a c y r e l a t i v e t o a b u s i n e s s o r g a n i z e d a s a c o r p o r a t i o n o r l imited liability company. I t c a n a l s o s o m e t i m e s b e m o r e d i f f i c u l t t o r a i s e b a n k finance, as sole proprietorships cannot grant afloating chargewhich in many jurisdictions is a sine qua non of bank financing. Hiringemployeesmay also be difficult. This form of business will have unlimited liability, therefore, if the business issued, the proprietor is personally liable. The life span of the b u s i n e s s i s a l s o u n c e r t a i n . A s s o o n a s t h e o w n e r d e c i d e s n o t t o h a v e t h e business anymore, or the owner dies, the business ceases to exist. 2

In countries withoutuniversal health care, s u c h a s U n i t e d S t a t e s , a s o l e proprietor is also responsible for his or her own health insurance, and mayfind difficulty finding any if one of the family members to be covered has a previous health issue.Another disadvantage of a sole proprietorship is that as a business becomessuccessful, the risks accompanying the business tend to grow. To minimizet h o s e r i s k s , a s o l e p r o p r i e t o r h a s t h e o p t i o n o f f o r m i n g a limited liability company, o r L L C . N o t e t h a t s u c h a n L L C w o u l d s t i l l b e t r e a t e d a s a s o l e proprietorship for income tax accounting purposes. Partnership A partnership is a type of business entityin which partners (owners)share with each other the profits or losses of the business undertaking inw h i c h a l l h a v e i n v e s t e d . P a r t n e r s h i p s a r e o f t e n f a v o r e d o v e r corporationsfor taxation purposes, as the partnership structure doesn o t g e n e r a l l y i n c u r a t a x o n p r o f i t s b e f o r e i t i s d i s t r i b u t e d t o t h e partners (i.e. there is nodividend taxlevied). However, depending onthe partnership structure and the jurisdictioni n w h i c h i t o p e r a t e s , o wners of a partnership may be exposed to greater personal liabilitythan they would asshareholdersof a corporation General partnership In the commercial and legal parlance of most countri es, a

generalpartnership or simply a partnership , refers to an association of persons or an unincorporated company with the following major features: Formed by two or more persons 3

The owners are all personallyliablefor any legal actions anddebtsthecompany may face Created by agreement, proof of existence andestoppel ] Partnership taxation Partnership taxation is the concept of taxing a partnership business entity.Many jurisdictions regulate partnerships and the taxation thereof differently.M a n y c o m m o n l a w j u r i s d i c t i o n s a p p l y a c o n c e p t c a l l e d " f l o w t h r o u g h taxation" to partnerships. Partnerships are aflow-through entitywhere thetaxes are assessed at the entity level but which are applied to the partners of the partnership. For an example Hong Kong Partnership taxation inHong Kongi s t h e t a x a t i o n o f t h e p r o f i t s o r l o s s e s generated by partnership business entities. First, these profits or losses of the p a r t n e r s h i p a r e a s s e s s e d a c c o r d i n g t o t h e H o n g K o n g I n l a n d R e v e n u e Ordinance, Chapter 112, section 22.After assessment, then said profits or losses flow through the partnership to the partners who are then taxed ontheir share of said profits or losses generated by the partnership without anytaxes levied against the partnership