Small Business Idea
Small Business Idea
Small business opportunities are now available via governmental funding. Currently the United States has approximately 26 million small businesses (Estes & Savich, 2011). The task at hand is determining the type of business to form; sole proprietorship, partnership, C corporation, S corporation, or a Limited Liability Company. Close examination of the five business forms is required along with identifying possible legal, tax, and other possible implications. Furthermore, according to Abrams (2003), a business plan assists with bringing together the business concept and turning the business concept into a successful business. Selecting the appropriate type of business is essential to achieving success.
Sole Proprietorship
A business owned and operated by one person is a sole proprietorship business (Nickels, McHugh, & McHugh, 2010). Sole proprietorships are one of the most common business types. This may be the result of the desire for individuals to become their own bosses. One of the benefits of being a sole proprietor is being able to set a work scheduled conducive to ones life. Furthermore, starting and ending a sole proprietorship is simple. Other than the proprietor, no one else is involved with the decision to start or end a sole proprietorship. The process of beginning or ending a business can be completed with ease and without outside intervention. Other benefits of sole proprietorship include the ability to turn the business over to children, or other family members, and the capability of keeping profits without paying dividends (Nickels, McHugh, & McHugh, 2010).
On the other hand, there are some disadvantages of sole proprietorship. The disadvantages include the possibility of personal losses; liability is unlimited (Nickels, McHugh, & McHugh, 2010). Additionally, a sole proprietors financial resources may be limited, long work hours, and little or no benefits (Nickels, McHugh, & McHugh, 2010).
Partnership
A partnership is a form of business with two or more owners (Nickels, McHugh, & McHugh, 2010). A partnership is easy to launch, has shared control, more extensive skills and resources, and benefit from tax advantages (Kimmel, Weygandt, & Kieso, 2009). The advantages of a partnership include combined resources and disadvantages include limited life (Kimmel, Weygandt, & Kieso, 2009).
C Corporation and S Corporation
A corporation is a legal element with authority to act and have legal responsibility separately from its owners (Nickels, McHugh, & McHugh, 2010). Corporations are owed by stockholders. An advantage of corporations as opposed to partnerships and sole proprietorships is reduced liability for investors (Nickels, McHugh, & McHugh, 2010). Transferring of ownership