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Date Submitted: 01/20/2014 10:06 AM
Small Business Idea
Heather Hamilton
ACC/561
April 1, 2013
Argelia Zaucha
Small Business Idea
Four different forms of business organizations are available to those who wish to open businesses. These four different forms include sole proprietorship, partnership, C-Corporation, and S-Corporation. Each form of business has advantages and disadvantages. This paper will provide a general overview of the advantages and disadvantages of the different forms of businesses; it will also include information on opening a small publishing company and the best option for its form of business.
Sole Proprietorship
Sole proprietorships are companies “owned and managed by one person” (Abrams, 2003, p. 398). Advantages to sole proprietorships are they are simple to establish, controlled by the owner, and have tax advantages. Disadvantages are the owner is personally liable for the business, financing can be difficult, and transferring ownership at a later time can be hard.
Tax, Legal, and Accounting implications
Sole proprietorships are taxed on personal taxes and considered self-employment income. The individual is responsible for any liabilities or debts. In the eye of the law, the owner is the same as the business; this can put personal assets at risk should the business be in trouble.
Sole proprietors may spend an excessive amount of time trying to keep accurate records. The owner will need to keep business transactions separate from personal transactions; this may mean opening and monitoring separate accounts and credit cards. The owner must account for paying local, state, and federal income taxes as well as self-employment taxes. It may be helpful to outsource this to a professional accountant (Howell, 2013). Sole proprietorships are excluded from the Sarbanes-Oxley Act.
Partnership
Partnerships are “an agreement with another company to undertake business endeavors together or on each other’s behalf; can be for financing, sales,...