Sole Proprietorship This is the most common type of business, where the business is managed and owned by a single individual. In this type of business, the sole owner provides the capital, does not share profits or losses, and runs the business alone. As such, the business and the owner are indistinguishable for tax and legal purposes (Dlabay, 2011). To differentiate this business from other types of business, a sole proprietorship is discussed based on the following characteristics.i. Liability: In case of commercial debts, the owner is personally liable and unlimitedly liable. The entrepreneur's assets can be used to repay business debts as the two are not distinct (Dlabay, 2011). This is the main limitation of a sole proprietorship. ii. Income Taxes: Because the business owner and the business are indistinguishable, the owner is taxed at the personal tax rate. It is significant to note that some expenses can be deducted before arriving at taxable income (Dlabay, 2011). iii. Longevity: In case of incapacity or death of the owner, the business dies. The company's assets are transferred to personal representatives or trustees, who administer the assets and settle any obligations of the company. This is a disadvantage of sole proprietorship as there is no continuity (Dlabay, 2011). iv. Control: a single owner manages and makes decisions autonomously. This is an advantage as making decisions is easy as no consultations are needed (Dlabay, 2011).v. Profit Retention: A sole proprietor owns the business alone and therefore retains all the profits himself. On the other hand, it absorbs losses on its own. you. Position. This form of activity does not require state declarations. Therefore, the sole proprietor can transfer the business at will… without paperwork… as required by state law. iv. Control: LLC has unlimited members. However, admission of new members must be obtained from other members. Furthermore, unlike an S-corporation, LLC also allows foreign members.v. Profit Retention: Profit is normally shared according to predetermined terms which may be stipulated in the LLC operating agreement (Dlabay, 2011). you. Location: Similar to other corporations, LLC can be registered as a business in any state, including the state in which it is physically located. If the LLC wants to be registered in another state it must meet the qualifications of a foreign entity. Additionally, necessary files must be filed and local and state taxes must be paid (Dlabay, 2011). ReferenceDlabay, L.R., Burrow, J., Kleindl, B., and South-Western Cengage Learning. (2011). Business principles. Mason, OH: Southwest Cengage Learning.