Small Business Idea

The government has released funds for creating small businesses and I have chosen to open a panini and soup shop. There is a need for a healthy quick eatery in my town and I think it would be profitable. The only other quick eating establishments in a short drive are fast food chains. Owning a small business is a great way to make money if it is successful. It is important to choose a business that you believe in and love to do. A potential business owner must consider startup costs and create a business plan. There are four forms of business organizations and it is important to select the appropriate one for the type of business that I want to open. This paper will weigh the advantages and disadvantages of each business type as well as the different types of financial statements and any implications involved.

A sole proprietorship is a one-person business that is not registered with the state as a corporation or a limited liability company (LLC). Sole proprietorships are the least expensive business type and easy to start a business with. Sole proprietors make all of the business decisions and do not have to answer to anyone above them. The business name will have to be registered and any licenses required by local government will have to be obtained. The biggest disadvantage to owning a sole proprietorship is personal liability for business debts. According to “Sole Proprietorship Basics” (2011), a sole proprietor can be held personally liable for any business-related obligation. This means that if your business does not pay a supplier, defaults on a debt, or loses a lawsuit, the creditor can legally come after your house or other possessions. Running a sole proprietorship is daunting and understanding tax, legal, and accounting laws can be difficult to manage. Income earned by a sole proprietorship is income earned by its owner. If the business fails, sole proprietors are not eligible for unemployment benefits. Owners can lose many fringe benefits that are...