Small Business Idea

Small Business Idea

University of Phoenix ACC/561

Instructor: Guyton Gagliardi

Melissa Sasse

When creating a small business, several factors have to be considered. The four forms

of business organization should be studied before making a decision. Sole proprietorship,

partnership, C corporation, and S corporation are the different forms. Each type of form has

different types of financial statements, advantages, disadvantages, and consequences associated

with each form. Consequences that may be associated with the business forms is tax, legal, and

accounting implications.

Sole Proprietorship

A sole proprietorship is set up to allow an individual to own and operate a business

(California Secretary of State, 2012). A sole proprietor is the only responsible party for the

business, including taxes and liabilities. The disadvantages is to have the responsibility to

pay the taxes without any assistance, and the owner is responsible for any liabilities. The

advantages of a sole proprietorship is the owner has total control of the business and

receives all the profits from the business.

Partnership

A partnership is when two or more people engage in opening a business for a profit

(California Secretary of State, 2012). In a partnership there is also advantages and

disadvantages for the owners. The advantages include the partners splitting the startup

costs, increased knowledge in different specialties, and increased funding. The disadvantages of

a partnership is the profits are split among the partners, rather than one person receiving

the total profits, both partners are responsible for taxes and liabilities, and disagreements

over the operation of the business may occur.

C Corporation

A C corporation is a legal entity that exists separately from the people who own, manage,

control and operate it (State of California, 2009). C corporations issue stocks to people or

other parties that provide funding or assets to the company as proof...