Accounting

Small Business Idea Paper

ACC/561 Accounting

Small Business Idea Paper

Ever consider starting a business or wonder what form of business a company is structured around? A business is any company that offers an exchange for goods or services amongst clients. Understanding the different forms of businesses that exist is important because each form has a different systematic approach to operations and adheres to laws tailored for that form. By examining a sole proprietorship, partnership, C corporation, and S corporate forms of business it will be clear to decipher between the sort and decide which form is best suited for the start up answering service that will be considered for this paper.

Sole Proprietorship

A sole proprietorship form of business is the simplest form in that it is comprised of one owner. Many startup businesses start as a sole proprietorship since “it is owned by one person…simple to set up and gives control over the business” (Kimmel & Kieso, 2009, p. 4). There are several advantages to operating a business under the sole proprietorship as Cheeseman (2010) lists, the startup is easy often does not cost much, since there is one owner all the management decisions can be made and changed as the owner sees fit, the owner has complete rights to the business and receives all the profits, and if the owner decides to transfer or sell the sole proprietorship they can do so easily without having to worry about consulting other owners (p. 530). There are some disadvantages to a sole proprietorship as this includes the owner being responsible for all legal matters, the success of the business, and the risk of forgoing “personal assets…[to] recover claims against the business” (Cheeseman, 2010, p. 531). If an individual has the idea to start their own house cleaning business they would benefit from the sole proprietorship type of business. This form of business allows the individual to save money on start-up costs and provides them with an...