Small Business Idea

Small Business Idea Paper

Chaquana Hales

ACCP/561

August 21st, 2013

Uzzell Freeman

Small Business Idea Paper

The four forms of business organizations comprise of sole proprietorships, partnerships, corporations and limited liability companies. Selecting an organizational formation for the organization is one of the primary stages when in the process of starting a new company. Each business form has advantages and disadvantages in terms of steadiness, raising resources and taxation. The form chosen for the company has legal ramifications on the business owners concerning personal asset protection.

Advantages and Disadvantages

Corporations

Several sizeable companies, like General Electric and AT&T, function as corporations. A corporation is a separate legal entity with a detached presence from the shareholders of the company. The limited liability protection is one of the greatest advantages of a corporation provided to owners of that corporation. A stakeholder's accountability for company debts and commitments does not exceed past the total he invests in the business. Dual taxation is a major disadvantage of an incorporated establishment. It is necessary for a corporation to file a corporate tax return and pay taxes on revenues at the company’s corporate tax rate (Carter, 2013). The second tax transpires when dividends are dispersed to stakeholders. A stakeholder is obliged to report dividends on a personal income tax return and pay taxes on those dividends at the personal income tax rates.

Partnership

A partnership is a business founded and managed by two or more persons who expect to make a profit. One of the major advantages of a partnership is the ability to join forces to pool one’s resources with others to attain company goals and objectives. Partners can divide up managerial obligations and work together on decision-making. A partnership alleviates the stress of all the work being on one person’s responsibility. Conversely, the likelihood...