Acc 561 Small Business Idea
Small Business Idea
Starting a business can be one of the most challenging endeavors to engage. Indentifying a need or want in a given industry, completing the pre-business research, demographics and analyses, then determining financial feasibility is only the tip of the iceberg. Choosing the right business structure will contribute to its long term success. Therefore, when selecting the appropriate business type, one must carefully consider the following: taxes, liability, administrative burdens, start-up and long term costs, legal implications, accounting, public reporting, a business partner’s agenda, the best method to reach financial goals, as well as considering the different types of financial statements associated with each form.
The four basic forms of a business are sole proprietorships, partnerships, c corporations and s corporations. Each of these forms has distinct advantages and disadvantages in relation to taxes, legal implications, accounting requirements and meeting the business’ objectives. Please refer to the illustration of these areas in the table below: ADVANTAGES DISADVANTAGES FINANCIAL FORMS
SOLE PROPRIETORSHIP
(Investor Guide. com, n.d.) and (All Business, n.d.) A sole proprietor has complete control and decision-making power over the business.
The sole proprietor of the business can be held personally liable for the debts and obligations of the business and its employees
Income statement and balance sheet Sale or transfer can take place at the discretion of the sole proprietor.
No corporate tax payments All responsibilities and business decisions fall on the shoulders of the sole proprietor.
all profits are fully distributed to the shareholders, and reported & taxed on each shareholder 's 1040 Minimal legal costs to forming a sole proprietorship, it’s easy to set up. Investors won’t usually invest in sole proprietorships.
Pays taxes on business profits through personal income tax
Starting a business can be one of the most challenging endeavors to engage. Indentifying a need or want in a given industry, completing the pre-business research, demographics and analyses, then determining financial feasibility is only the tip of the iceberg. Choosing the right business structure will contribute to its long term success. Therefore, when selecting the appropriate business type, one must carefully consider the following: taxes, liability, administrative burdens, start-up and long term costs, legal implications, accounting, public reporting, a business partner’s agenda, the best method to reach financial goals, as well as considering the different types of financial statements associated with each form.
The four basic forms of a business are sole proprietorships, partnerships, c corporations and s corporations. Each of these forms has distinct advantages and disadvantages in relation to taxes, legal implications, accounting requirements and meeting the business’ objectives. Please refer to the illustration of these areas in the table below: ADVANTAGES DISADVANTAGES FINANCIAL FORMS
SOLE PROPRIETORSHIP
(Investor Guide. com, n.d.) and (All Business, n.d.) A sole proprietor has complete control and decision-making power over the business.
The sole proprietor of the business can be held personally liable for the debts and obligations of the business and its employees
Income statement and balance sheet Sale or transfer can take place at the discretion of the sole proprietor.
No corporate tax payments All responsibilities and business decisions fall on the shoulders of the sole proprietor.
all profits are fully distributed to the shareholders, and reported & taxed on each shareholder 's 1040 Minimal legal costs to forming a sole proprietorship, it’s easy to set up. Investors won’t usually invest in sole proprietorships.
Pays taxes on business profits through personal income tax
References: All Business. (n.d.). Advantages and disadvantages of the four business structures. Retrieved from http://www.allbusiness.com/business-planning/business-structures-sole-proprietorships/2512-1.html#axzz24cWPOWb7 Investopedia. (n.d.). SOX and FASB. Retrieved from http://www.investopedia.com/terms/s/sarbanesoxleyact.asp#ixzz24ccPYgdx Investor Guide. com. (n.d.). What are the four business structures. Retrieved from http://www.investorguide.com/igu-article-1129-starting-your-business-what-is-a-limited-partnership-lp.html