Small-Business Idea Paper
There are many advantages and disadvantages of the different forms of business organizations. Not all entrepreneurs have a specific need that would say one is better than the other; it depends on the needs of the proposed company and the wants of the entrepreneur. Having an interest in a small business in the future the proper analysis is necessary. A deeper look into sole proprietorship, partnership, C Corporation, and S corporation with perspective views around financial statements will be reviewed. Additionally the possible consequences for each form will be analyzed. After all the research is discussed a decision will be made as to how my proposed business and service would benefit from a specific form of organization over the others. Sole Proprietorship
A sole proprietorship is simple to establish, is owner controlled, and has tax advantages. A sole proprietorship “is a person who operates his or her own business, usually from a home office” (Butow, 2004, pg 21). This is typically the easiest way to start a business and requires the least amount of paperwork compared to the other forms. Sole Proprietorships pay taxes on their business income through IRS forms “C and SE, which are provided with the Form 1040 packet” (Butow, 2004, p. 21). The accounting for a sole proprietorship can be done independently with little implication; however accounting integrity is important for success but not enforced. Financial Statement
The balance sheet reports the financial position of a business, including a sole proprietorship, at a specific point in time this is important to gage the success or failure of the business. The income statement specifically shows the results of earnings activities for a specific time period, often shown in a period specified by the creator such as a month, quarter, or the whole year. A sole proprietorship owner would want this to report whether or not the expenses for the company exceed the revenues, if so the...
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Butow, E. E. (2004). Starting your business: Costs, structures, and pitfalls. Intercom, 51(10), 20-23.
IRS. (2012). Tax information for corporations. Retrieved from http://www.irs.gov/Businesses/Corporations
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2009). Accounting: Tools for business (3rd ed.). Hoboken, NJ: John Wiley & Sons.
Roberts, S. (2012). Financial statements of a sole proprietorship. Retrieved from http://smallbusiness.chron.com/financial-statements-sole-proprietorship-14717.html
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