...There are three legal forms of business: Sole Proprietorship, Partnership, and Corporation. The inventor scenario sounds like the business would start as a Sole Proprietorship since there are limited finances and the inventor’s net worth is low. However, with the new technology being introduced this business could quickly grow and eventually turn into a Partnership or possibly Corporation. A Sole Proprietorship is the easiest business to start with little overhead cost. All decisions are made by the proprietor, so no worries with disagreements since the proprietor is the boss and getting started doe not cost a lot. The downfall to being a Sole Proprietor is you are an extension of your business so if things start to fall apart your personal assets can be seized. The proprietor has to make sure they have taken all the necessary steps in education and training to make sure the business doesn’t look weak and not well managed. A Partnership is a great way to start a business with a friend or family member and luckily there is no set limit on the amount of partners one business can have so a whole class could start an amazing business. The important thing to remember about a partnership is that everyone, no matter the number is equally responsible for the debt created to run the business. Very different from the Sole Proprietorship where its one for all and the Partnership is all for one. The disadvantages of a Partnership include possibly not being able to mutually agree,...
Words: 501 - Pages: 3
...Proprietorships, partnerships and cooperation’s Proprietorships, partner ships and cooperation these are three types of businesses operations a entrepreneur can choose from or in other words can be a part of one. Starting with proprietorship or sole proprietorship is a business operation in which one person or one entrepreneur owns or holds the business. It is one of the simple business operations because it gives full control of the business and it is simple to get started with and set up. This is perfect for small business that is just starting up, small stores like retail stores, hardware shop, retail shops , barber shops, repair shops or other small business. You own the business and you’re your own boss. Moving on to partnerships these maybe the same business mentioned above or any other business but this time you are with a partner this is not all bad, partners can bring better change, they may have better skills and quality to make a business grow and plus it also helps to share the cost but you will also have to share the profits but all that burden on one entrepreneur can be to much and he or she may need help. The last business organization is cooperation this is when stocks get involved the owner ship of the company is in stocks so if you are a investor in a cooperation the company will give you shares of stocks and these are what the company is worth this is also proof that you have some owner ship of the company. The easy things about stock are...
Words: 352 - Pages: 2
...entrepreneur you are able to take control and direct the culture of your organization and determine what key factors will make your business successful and outdo the competition. The flexibility that you can establish is beneficial to being able to balance your work and personal life with family and friends; all while you are challenging yourself by the new opportunities that will constantly be presented and the creativity that goes along with it. More importantly establishing what type of business is the most important; sole proprietorship, partnership and or a corporation. A sole proprietorship, often being identified as one-person operation, is the most common business structure throughout the world. With a sole proprietorship you have complete control of your organization, making all decisions from your target market, employees, location, and so on. It is simple and easy to establish this type of business structure and the start-up cost are low as well. There are several disadvantage of this type of business structure. Personal liability is a major disadvantage because it is not separate from our business; meaning creditors can sue you directly. Another issue is the ability to raise money to start your business. Most lenders are fearful to financing sole proprietors simple because if the business fails no money will be collected. A partnership is that of two or more persons. Similar to sole proprietorship, a partnership has a low start-up cost, and a simple agreement between...
Words: 702 - Pages: 3
...United States International University – Africa Individual Term Paper Name: Tushar Prakash Nainani ID No.: 640633 Course: BUS 1010 – Introduction to Business Organizations Schedule: Mondays & Wednesdays 11:00 – 12:40 Professor: P. Gachago Semester: Fall 2013 Individual Term Paper Now that you have attended several business lectures at USIU, you decide to start a kiosk business in your estate, selling potatoes. 1) Under what legal form of business would you register your business? 2) Why would you choose that form of business? 3) What, in your view, would make up the supply chain of your business? Table Of Contents * Executive Summary Pg. 3 * Question 1 Pg. 4 * Question 2 Pgs. 5-6 * Question 3 Pgs. 7-8 * Conclusion Pg. 9 Executive Summary The kiosk business would be registered as a sole proprietorship. Since it is a small scale business, not much money is required to start up the business. The owner has full authority over the business and can run it any way they please. Not many legal documents required, only...
Words: 1362 - Pages: 6
...University of Phoenix Material Sabrina Morton Business Forms Worksheet There are seven forms of business: sole proprietorship, partnership, limited liability partnership, limited liability company (including the single member LLC), S Corporation, Franchise, and Corporation. 1. Research and provide three advantages and three disadvantages for each business form. 2. Provide a 100- to 200-word summary in which you provide an example business that you would start for each form. What is legally necessary to file in order to form that business? Discuss at least one of the advantages and one of the disadvantages of that form. Sole Proprietorship Advantages 1. Ths sole proprietor (owner) has complete control and decision making power of the business. 2. Sale or transfer can be completed at the discretion of the sole proprietor. 3. No corporate tax payments. Disadvantages 1. The sole proprietor can be held personally liable for debts and obligations of the business. 2. All responsibilities and business decisions fall on the shoulders of the sole proprieter. 3. Investors don’t usually invest in sole proprietorships. Summary I would start an online costume selling business as a sole proprietorship. I would choose this type |of business as a sole proprietorship because it is an inexpensive business. I would not have to open up | |an actual building to sell the costume jewelry. I would have a...
Words: 1436 - Pages: 6
... investments B. financial management C. treasury management D. none of these 7. This subarea of finance helps facilitate the capital flows between investors and companies. A. investments B. financial management C. treasury management D. financial institutions and markets 10. This is a general term for securities like stocks, bonds, and other assets that represent ownership in a cash flow. A. investment B. financial asset C. real asset D. financial markets 12. Which of the following managers would NOT use finance? A. Operational managers B. Marketing managers C. Human resource managers D. All of these would use finance 15. This type of business organization is relatively easy to start, and it is subject to much lighter regulatory and paperwork burden than other business forms. A. Sole proprietorship...
Words: 3776 - Pages: 16
...Business Organization Melanie Smith BUS/210 June 01, 2014 Shane Wenttz Business Organization Mamma Mel’s company structure will be that of a sole proprietorship. A sole proprietorship is one of the most common and simplest company structures to form as it is a one man, or in this case, one woman operation where in the owner (me) takes on all aspects of operating the business including all associated risks and liabilities. Some of the advantages to operating as a sole proprietor include inexpensive to form with legal costs being limited to obtaining necessary licenses and/or permits, Simple tax filing, tax rates are low and the business is not taxed as a separate entity and the owner of the business retains complete control of every aspect of the business. As with all business structures along with the advantages there are disadvantages as well for the sole proprietor these include difficulty raising funds due to the liability to sell stock, unlimited personal liability and the Heavy burden of maintaining profitability. A Business Model refers to the means and the methods used for the successful operation of a business indicating how the business will convert inputs such as labor and capital into outputs that will yield a profit for the business. Mamma Mel’s business model for the food truck will be a straightforward approach of providing fresh, handmade food items as quickly as possible. Once business increases and I am able to locate retail space I will continue...
Words: 396 - Pages: 2
...the profitability, risk, and value of the firm (Madura, 2004). Sole proprietorship, as the simple and easy to form type of business, is a business that is owned by one person. The vast majority of small business starts out as sole proprietorships. Sole proprietors own all the assets of the business and the profits generated by it. Most small business owners prefer the proprietorship because it is simple to enter, operate, and terminate and provides for relative freedom of action and control (Megginson, et al., 2000). On the other hand, partnership is defined as a voluntary association of two or more persons to carry on as co-owners of a business for profit. Like proprietorships, the law does not distinguish the business and its owners. The partner should have a legal agreement that sets forth how decisions will be made, how profits will be shared, how disputes will be resolved, how future partners will be admitted to the partnership, how partners can be bought out, and what steps will be taken to dissolve the partnership when needed. Yes, it is hard to think about a “breakup” when the business is just getting started, but many partnerships split up at a crisis times, and unless there is a defined process, there will be even greater problems. Partnership is similar to the proprietorship but is more difficult to form, operate, and terminate. Partnerships, however, are generally more effective than proprietorships in...
Words: 1468 - Pages: 6
...A Sole Proprietorships’ Project Plan Lorrie Fontanilla American Intercontinental University Nicole Anderson Harris MGMT240-1201A-04 Abstract This paper demonstrates a sole proprietorship in the service sector and its related concerns associated with it. In addition the report also provides a convenient budget. Furthermore, a definitive timeframe for the project plan, an explanation on communication and the organization’s deliverables. Effective listening and responses and effective group communication will also be described. Project Plan Why prepare a business plan? It depends on the type of business, the size, and structure of the entity. Focusing on a sole proprietorship and its issues evolves into creating a project plan that will include various phases of the business. When designing a project plan one needs to formulate a strategic design of easily acquiring the one common purpose, generating profits. The interim contentions, methodologies, indifferences, time differences and dynamics in general, will be covered in the system as well. In a sole proprietorship the manager or owner draws up the plan. A plan is not something that is developed suddenly and then forgotten. Dynamic organization is a core part of your business large or small. Planning is a very intense part of the process, it includes; evaluating the situation, creating a mission, getting prepared, setting your objectives, setting up timelines, dependencies, exercising the plan, and then monitoring...
Words: 1696 - Pages: 7
...Financial Management DB #1 Maurice Wynn There are three major types of organizations. There is the sole proprietorship, which is an organization that is owned by one individual. There is the partnership, which is an organization that is operated by more than one person. There is also a corporation. A corporation is an organization that buys and sells stock and their liability is limited to the amount of their investment. With these three types of organizations, there are some advantages and disadvantages to them (Zaheer, N.D). The advantages to a sole proprietorship are as follows. They are easy to set up. Decisions are made by one person, since there is only one owner who has control. The income is taxed only once as personal income. One disadvantage is that the owner has unlimited liability for the obligations of the organization. It can also be difficult to raise financial capital for the organization (Zaheer, N.D). Similar to sole proprietorships, partnerships are easy to set up and the income is only taxed once. With partnerships, you have access to more financial capital than a proprietorship. There is also specialization, more skills will be available. A disadvantage would be that there may be disagreements between partners which can generate a lot of issues when it comes to making decisions. There is also unlimited liability for partners. There may be legal issues when a partner leaves the organization (Zaheer, N.D). An advantage for a corporation would be that there...
Words: 425 - Pages: 2
...financial statements for wide variety of entities, including publicly-traded and privately-held companies.” The principles are set by Financial Accounting Standard Board(FASB), Interpretations, and staff positions; APB Opinions and AICPA Accounting Research Bulletins. FASB standard, Interpretations and Staff position. The GAAP are guidelines that all accountants must follow when preparing financial statements for different organization and companies. Each Organization listed above creates the GAAP hierarchy each one is important to the accounting principles for the reason it identifies the sources on the way that financial statements should be prepared. Topic 2 In order to comply with federal laws, every accountant must have knowledge of effective accounting information. Since most organizations hire accountant firms to handle their financial aspects, the SEC was designed to watch each firm closely to make sure that they are doing everything according to federal guidelines. The effective account information comes from GAAP and the different organization that governs...
Words: 763 - Pages: 4
...and without them, such organizations as Wal-Mart and Macy’s would never exist. In this paper, we will examine the four different forms of business organization, weigh their strengths and opportunities, and identify the best type for a future individual business venture. We will start by examining the four types of business organizations. “According to the U.S. Census Bureau, small businesses are responsible for over half of the private sector workforce, 50 percent the gross domestic product, 90 percent of exports and innovations, and 90 percent of net new jobs” (Anderson, 2004). The most basic type of business organization is the sole proprietorship. In this style, the business is typically owned by one person. The advantages of a sole proprietorship are autonomy, independence and full decision-making abilities. Since there is one owner, there are no shareholders or boards of directors to work with in steering the direction of the organization. The downside of a sole proprietorship is that all tax implications fall on the owner. This includes all profits made, losses recognized, and all liabilities and debts. For one person, this may be a very expensive venture and if the organization has a bad year, the owner could potentially lose everything. The sole proprietorship takes on unlimited liability, full tax burden, and all ownership of the organization. They are relatively easy to set up, transfer ownership of, keeps records for. A sole proprietorship is also easy to terminate...
Words: 1080 - Pages: 5
...Forms of Business Organizations AIU Online FINA310 Unit 1 DB Charlotte Taylor 06.09.13 Within the business world there are numerous forms of businesses global and domestic. Therefore, choosing the right form of ownership can be hectic. Although, there are numerous choices to make I hope to make the decision less hectic by discussing some advantages and disadvantages of three of the most common forms that may be right and profitable for the business. The three legal forms are: (sole) proprietorships, partnerships, and corporations. Sole proprietorships are owned by an individual who makes all the decisions about the business and therefore, pockets the revenue that is made. Sole proprietorships are the most common form of business that represents one individual owner with few legal responsibilities or requirements. Other advantages of forming a proprietorship is that they are easy to form, operate, and more affordable to form. Simply put, a sole proprietorship is a simple form of business; unfortunately, there are disadvantages for the individual. Some disadvantages are: the loss of tax-free benefits; the owner can be sued since the owner and business have become one; unlimited exposure to the owner; and the owner is responsible for all legal debts and issues that is accrued by the business and risk the loss of personal assets (AIU Online, 2013; Brooks, 2013). Partnerships are quite similar but different in their own way; a partnership is formed by two or more individuals...
Words: 716 - Pages: 3
...Sole Proprietorship The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts. A sole proprietorship can operate under the name of its owner or it can do business under a fictitious name, The fictitious name is simply a trade name--it does not create a legal entity separate from the sole proprietor owner. Formation The simplest and most basic form of a sole proprietorship usually requires little to no formalities. Without the official formation of a separate and new entity, such as a corporation, the legal name of your business is the same as your own name, since essentially you are the entire business. The products or services you sell to the public affect your own personal income and taxes. This is the easiest way to start and operate a business. When people pay the business, they pay you directly. Advantages A sole proprietor has complete control and decision-making power over the business. Sale or transfer can take place at the discretion of the sole proprietor. Minimal legal costs to forming a sole proprietorship Few formal business requirements No corporate tax payments Another advantage of forming a sole proprietorship is the taxation rules established by the Internal Revenue Service. Sole proprietors are not required to file separate tax returns for their business. Income made from the business...
Words: 1729 - Pages: 7
...financial statements, such as balance sheets, income statements and cash flow statements, for publicly traded companies and many private companies in the United States (Paul, 2008). The main sources of GAAP are the United States Securities and Exchange Commission (SEC), American Institute of Certified Public Accountants (AICPA), Financial Accounting Standard Board (FASB), Financial Accounting Standards Board (FASB), and the Governmental Accounting Standards Board (GASB). The SEC is a structure for setting accounting standards. The ACIPA created the Accounting Principle Board and serves as an organization to provide CPA services the best professional resources, guidance, and information. The FASB was renewed by the Accounting Principle Board (APB). ACB consists of Financial Accounting Foundation (FAF), the Financial Accounting Standards Advisory Council (FASAC), and the major operating organization in this structure - the Financial Accounting Standards Board (Pakhare, 2011). The GASB agency handles the local and state government matters. The hierarchy of GAAP is defined in a...
Words: 736 - Pages: 3
