ACC-1A Lecture Notes - Lecture 19: Australian Securities Exchange, Legal Personality, Sole Proprietorship
Document Summary
A sole proprietorship is a business owned by one person. Within this form, the owner maintains complete control of the business, bears all risk of failure and reaps all the rewards of success. For accounting purposes, a sole trader is accounted for separately from the proprietor"s personal affairs (and possibly separate from other businesses) this is an application of the economic entity assumption. For tax purposes, though, a sole trader"s business is not separate from the traders themselves the income from the business is reported on the owner"s personal tax return. A partnership is a business that is formed when two or more proprietors join together to own a business. Partnerships can be established by either a written or an oral agreement and can include many partners. Like sole traders, a partnership is considered a separate accounting entity, separate from. However, also similarly, a partner"s share of partnership income is reported on the the individual partners. partner"s individual tax return.
