This document includes an idea of a small business. The main motivation for establishing this small business is to take advantage of the fund that the government has released for creating small businesses. In this document include a decision on which of the four forms of business organization would best suit our unique product or service. Consider legal, tax, accounting, and other implications. Also it will include the advantages and disadvantages of the four different forms of business organization, the different types of financial statements associated with each form of business organization, and the consequences associated with each form of business organization.
Small Business Description
The small business that I would like to establish is an energy audit and consultation company. The reason behind choosing this business is the low overhead costs to start up. The business success depends on creating a good customer base and a list of positive feedback and success stories. The small business will provide an audit service and consultation services to the customers whom interested in saving money on energy.
Business Forms Comparison
There are four different options for the business form. This section explains the advantages and disadvantages of each business form. 1- Sole Proprietorship
In this form of business, the business will be owned and managed by a person that should be personally liable for his business decisions. * Advantages of Sole Proprietorship: A. Easy to form: does not need to meet any predefined requirements B. easy to dissolve: Just close the shop C. simple taxation: The taxation for this business will be attached to the business owner personal tax * Disadvantages of Sole Proprietorship: A. High liability: the business owner is personally liable for his business decisions. B. Harder to raise funds 2- Partnership
In this form of business, the business will be owned and managed by multiple persons and they share the responsibility and liabilities of the business. * Advantages of Partnership A. Easy to form: does not need to meet any predefined requirements B. Easy to dissolve: Just close the shop C. Simple taxation: The taxation for this business will be attached to the business owners personal tax * Disadvantages of Partnership A. High liability: owners will be liable for all business decisions B. Harder to raise funds C. Hard to separate liability: all business owners will be liable for a single partner business decision. 3- Limited Liability Company (LLC)
The limited liability company (LLC) is a separate entity managed by the LLC founders or creators.
* Advantages of LLC A. Easy to form and dissolve B. Lower Liability: The LLC entity is liable for all business decision C. Easier to raise funds D. Easier to…