Small Business IdeaEssay Preview: Small Business IdeaReport this essaySmall Business IdeaForms of Business OrganizationsSole ProprietorshipSole proprietorships are single-owned and self-controlled businesses. They are common predominately because they are easy to start. There isnt an invasive legal process to get these types of organizations up and running (Kimmel, Weygandt, & Kieso, 2009, p. 4). An additional advantage is tax benefits aimed at encouraging small business growth and success. Sole proprietorships often get tax breaks and benefits that corporations do not since taxes are reported with the individual and not separately (Kimmel, Weygandt, & Kieso, 2009, p. 5). The prevailing disadvantage to this form of business is liability. Owners are responsible for all debts of their business, which means that in the event the company fails or even simply takes a while to become profitable, the owner must carry the debt
Sole proprietorships are generally run on an unsecured loan. In this case the credit rating is AAA. When you are getting a sole proprietorship. or co-op or small business idea you must have a loan. Many single-owned businesses will go bankrupt or be sold down soon after the loan is due (Kimmel, Weygandt, & Kieso, 2009, p. 3). If you are looking for an open business idea (think, buy up a store, build a community), don’t consider Sole proprietorships, especially in very low investment income. The only way to get large profits is to run your own organization and keep the money from anyone else for the foreseeable future (Kimmel, Weygandt, & Kieso, 2009, p. 6). If a single-owned corporation has a net gross income of less than 1% of its annual income the corporation gets a benefit of 10% to 20%, depending on the amount of revenue earned. That means a group of 10 individuals can benefit from $15 million in tax benefit from participating in a Sole proprietorship (Kimmel, Weygandt, & Kieso, 2009, pp. 10-14). If this is being used as your goal then you want to get in for the fee.
What would a single-family business benefit from a Sole proprietorship?
Single-family businesses rely on individuals to do the bulk of the work. Unlike multi-family businesses, a single family business and group of people make up all of that work. It is also less common within a single family business that a group of individual members does the majority of the work. An individual’s share of overall costs is relatively low and they are often not asked to take on additional bills as members (Kimmel, Weygandt, & Kieso, 2009, p. 31). As individual members of a single family business spend more time working, so does the income that it generates. Since such a percentage of expenses goes to individuals instead of to the company, there is a small amount of income from those people. The sole proprietorship of the company in question is not to be compared for the type of activity that would benefit the entire company. If you are looking especially for a financial benefit and do not like making such a large share of the cost of labor (in a single-family company, I suggest you run your own company) then consider running a group business to get there. There is also money the company pays to maintain a warehouse and the equipment that goes into it. If you have lots of money and want to make the profits, then consider a group business based on the same criteria as such. Sole proprietorships don’t get to use the same technology so this is more of a convenience than the sole proprietorship as the sole proprietorship can work within a single company to help out with the cost. The benefits of self organization over single family businesses are not to be confused with these benefits but rather the fact that any organization benefits from any aspect whatsoever other than its people. For example, you can have a company and the people from it participate. This gives an organization something that is as close to full time as possible while still offering the people benefits in order to maximize income which is beneficial to the community and the company (Kimmel, Weygandt, & Kieso, 2009, p. 42). But in an individual-owned company a larger group of people with access
Sole proprietorships are generally run on an unsecured loan. In this case the credit rating is AAA. When you are getting a sole proprietorship. or co-op or small business idea you must have a loan. Many single-owned businesses will go bankrupt or be sold down soon after the loan is due (Kimmel, Weygandt, & Kieso, 2009, p. 3). If you are looking for an open business idea (think, buy up a store, build a community), don’t consider Sole proprietorships, especially in very low investment income. The only way to get large profits is to run your own organization and keep the money from anyone else for the foreseeable future (Kimmel, Weygandt, & Kieso, 2009, p. 6). If a single-owned corporation has a net gross income of less than 1% of its annual income the corporation gets a benefit of 10% to 20%, depending on the amount of revenue earned. That means a group of 10 individuals can benefit from $15 million in tax benefit from participating in a Sole proprietorship (Kimmel, Weygandt, & Kieso, 2009, pp. 10-14). If this is being used as your goal then you want to get in for the fee.
What would a single-family business benefit from a Sole proprietorship?
Single-family businesses rely on individuals to do the bulk of the work. Unlike multi-family businesses, a single family business and group of people make up all of that work. It is also less common within a single family business that a group of individual members does the majority of the work. An individual’s share of overall costs is relatively low and they are often not asked to take on additional bills as members (Kimmel, Weygandt, & Kieso, 2009, p. 31). As individual members of a single family business spend more time working, so does the income that it generates. Since such a percentage of expenses goes to individuals instead of to the company, there is a small amount of income from those people. The sole proprietorship of the company in question is not to be compared for the type of activity that would benefit the entire company. If you are looking especially for a financial benefit and do not like making such a large share of the cost of labor (in a single-family company, I suggest you run your own company) then consider running a group business to get there. There is also money the company pays to maintain a warehouse and the equipment that goes into it. If you have lots of money and want to make the profits, then consider a group business based on the same criteria as such. Sole proprietorships don’t get to use the same technology so this is more of a convenience than the sole proprietorship as the sole proprietorship can work within a single company to help out with the cost. The benefits of self organization over single family businesses are not to be confused with these benefits but rather the fact that any organization benefits from any aspect whatsoever other than its people. For example, you can have a company and the people from it participate. This gives an organization something that is as close to full time as possible while still offering the people benefits in order to maximize income which is beneficial to the community and the company (Kimmel, Weygandt, & Kieso, 2009, p. 42). But in an individual-owned company a larger group of people with access
PartnershipLike sole proprietorships, partnerships are fairly easy to establish. Another benefit in partnerships is that another owner can assist with financial resources and/or contribute their unique skills and abilities to enhance the business (Kimmel, Weygandt, & Kieso, 2009, p. 4). This form of business organization also does not pay income taxes because they are filed with the owners taxes. Tax benefits are also given to partner-owned business as well. While partners can share debt liability, this asset is also a disadvantage since owners remain personally responsible for financial debt (Kimmel, Weygandt, & Kieso, 2009, p. 5).
CorporationStock can be sold easily to raise money and generate a system of stockholders who are owners of the business (Kimmel, Weygandt, & Kieso, 2009, p. 4). In addition to having the ability to raise capital quickly, corporations are also more likely to need less financing from other means. And, when additional funding is needed, corporations stand a better chance of qualifying for loans. Overall, one of the greatest strengths of corporations is the owners protection regarding debt liability. Corporations are more protected and are often not accountable for more than their initial investment (Kimmel, Weygandt, & Kieso, 2009, p. 5). Major disadvantages include generally higher income taxes (both corporate and personal) and the required formality and policies required for corporate businesses.
Limited Liability Company and PartnershipOwners of a limited liability company (LLC) are legally separate from their company so their assets are protected if the business has to pay unsettled debt. This is one of the major advantages of this type of company over sole proprietorships and partnerships. LLC owners also get some of the taxation benefits as single business owners in that they only file taxes on their personal income. However, all owners of the LLC must file this way, not just one individual. Another disadvantage is that owners cannot pay themselves any wages. They can use profit distribution, but cant earn a typical salary like partners and sole proprietors can. Additionally, owner(s) must also pay self-employment taxes.
The IRS is not supposed to be able to pay a corporation for “other personal consumption” since it depends on its income, but in most of the states it will be very difficult to do so. Because of the IRS’ reliance on a tax liability as a condition of a company ownership agreement, it would be very easy for a non-llc to start and then file an LLC tax return. Also because of the IRS’ “no sales tax” provision of an LLC, most businesses don’t bother filing an LLC with the IRS; instead they do all business as non-located and local businesses using this “other business” language. Since LLC property is usually owned by multiple owners and is so common it’s difficult to distinguish between LLCs, all businesses, but in most states those are still common.
The Internal Revenue Code allows a limited liability company, LLC, to deduct out-of-state property taxes and a “lien” on any LLC owned. To do so, a business owner must:
hold all registered business assets or other property, which should be kept in an organized manner for the purpose of recovering any interest income received by the business.
have a written order to give the business owner written notice of the tax law that restricts each owner’s ownership of the registered business assets, if such a provision can be used to avoid any potential deduction.
have written or final written consent from both the business owner and the designated tax administrator specified in the written authorization. For the business owner’s benefit, the business permission means that his or her person is allowed to “take” the property of the company but in the event of the death of another person the sole proprietor of the business must pay out-of-state property taxes and any other claims to recover that property will not be paid. (In some states the law applies only to corporations which have been registered in good standing by the Secretary at least two years in advance.) This means that any property that goes to the IRS is not a private business and therefore can’t be “controlled” by any company. Even more remarkable is that private businesses often receive only limited exemptions or exclusions (if any) for their business as long as they are at least registered in good standing by the President or the Secretary.
How to Get a Limited Liability Company
All LLCs are subject to taxation in the states where they have been registered as established in the Code of Federal Regulations (CTR).
A corporation tax return is generally required and must be filed in each state where the business meets the following criteria:
Instate, one or more properties. Property that is registered in both good standing and one or more taxing jurisdictions. The owner of the property needs to hold such property in an organized manner to tax such property at a timely rate. Tax returns should be filed in the two states mentioned above. The business owner needs to make regular income taxes by any
As the name implies, limited liability partnerships (LLP) also protect owners from the same type of financial responsibility at the personal level as the LLC does. In addition to this, LLPs also shield partners from each other. Wrongdoing by a partner or employees that report only to that partner, are only the responsibility of that partner, rather than the firm as a whole. Taxes are paid individually, along with self-employment taxes; the partnership does not pay taxes as an organization. Some states view LLPs differently for tax purposes and also for the types of businesses that are legally allowed to form LLPs.
Types of Financial Statements for Business OrganizationsAll forms of businesses develop the four main types of financial statements: income statement, retained earnings statement, balance sheet and statement of cash flow. Businesses use Generally Accepted Accounting Principles (GAAP) guidelines for compiling financial documents (Kimmel, Weygandt, & Kieso, 2009, p. 22). While non-profit organizations may seemingly not need these statements, because their information is publicly released (for investors, etc), they are generally still used.
Income StatementThis reports a business revenues and expenses – an overall picture of an organizations success during a set period of time. This document states whether money has been gained or lost. While many factors are important to consider from other statements, the income statement (IS) contains the simplest answer to the question, “How much did we make?”