Small Business Paper

Small-Business Idea Paper

ACC/561

This assignment is all about learning and understanding the four main types of Business Organizations and the financial statements associated with each of them. I would be also touching upon the tax, legal and accounting implications associated with them. I shall also explain my rationale for choosing the Sole Proprietorship type of organization and will briefly explain the unique service offered by the same.

Sole Proprietorship

This type of business organization is that in which there is only one owner who is responsible for paying the personal income tax on profits he makes from the business. The main advantages are that there is very little government regulation; they are a very simple business to set up or take apart and also the Tax advantage. The disadvantages, however is that the sole proprietor is not safe from liabilities incurred by the entity. The debts of the sole proprietorship are also the debts of the owner. Another disadvantage is that obtaining capital funding is a challenge and so is obtaining bank loans and lines of credit.

Partnership

This is a business organization in which two or more individuals are the owners who are responsible for managing and operating the business. Both owners are therefore equally and personally liable for the debts from the business. One big advantage of a general partnership is that you don't have to register with your state and pay an often hefty fee, as you do to establish a corporation or limited liability company. A major disadvantage of doing business as a general partnership is that all partners are personally liable for business debts and liabilities.

S Corporation

This type of corporation would require extra accounting or you'll need to pay a bookkeeper or accountant to do the same. As compared to a sole proprietor, S corporation tax returns cost more to prepare. Another important disadvantage is that...