Financial Statements. This essay examines the statements associated with the sole proprietorship, the partnership, the C corporation and S corporation. Have doubts how to write your paper correctly? A partnership is a form of ownership where the responsibility for the company is shared among two or more partners. I would call it "Heidi's German Bakery and Cafe." Sole proprietorship involves low overheads because the sole proprietor manages the business affairs himself. It’s very easy to form a proprietorship business since very few formalities and legal requirements are necessary in the formation of this business. Based on income, was there a…… [Read More], Economics Essay Sample: 1.Understand the importance of sole proprietorships in our economy. Personal funds can be at risk for a sole proprietor. b. Certainly, the tax implications of the decision are going to be relevant. The franchise can be operated as a sole proprietorship, a partnership, or a corporation. Generally accepted accounting principles (GAAP) require four different financial statements for most forms of business organizations: the balance sheet, income statement, cash flow statement, and statement of shareholders, partners' or owner's equity. All profits and all losses accrue to the owner (subject to taxation specific to the business). Louise is considering transferring her business to…… [Read More], The office and administrative expenses would remain constant even to that point, as would the insurance expense. However, based on the scenario represented for the individual who has an idea for a product a sole proprietorship would most likely represent the ideal form for the individual to get started with and if the product does turn out to be a success then they could always reorganize the business later on. These units have been acquired over a number of years since 1994 and their market values have increased considerably in recent years. Here the overall business as well as the business owner is viewed legally as a same entity. From the perspective of ownership risk, the best form of business organization is the _____. In businesses that involve numerous members of the same family, the preferred business choice of conduct is the partnership. Hence it is easy to form and close the business. 3. Other private sector business aims include furthur growth, increasing market share and maximising sales. Limited Resources: The resources of the proprietor are limited to his personal savings and borrowings. Michelle is perfectly qualified, and cannot be turned down solely because of her (supposed) pregnancy, and is therefore the top choice according to the criteria. This form of an enterprise has unlimited liability. The third member of the business would be an American baker who received his professional training at Venieros Italian Bakery, America's oldest Italian pastry shop in New York City that was founded in 1894. Was this done with the approval of the Board of Directors? Cash flow, quite simply, is how much money goes in and goes out of the organization. Sole proprietorship is when one person owns and runs his or her own business. A corporation is an independent and a lawful entity unique from its owners. Sole Proprietorship A exclusive proprietary is the simplest and most common construction chosen to get down a concern. Legal Aspects Of A Franchise The business is carried out from a number of valuable retail outlets, all of which are owned by Louise personally. At paperdue.com, we provide students the tools they need to streamline their studying, researching, and writing tasks. When deciding what entity to form under advantages and disadvantages are a … Vision Sole Proprietor Taxes. In many European countries for example, the small business has been considered crucial to the success and flourishment of the country in general. However, in certain limited circumstances, if an employer can demonstrate that "no member of the group" he or she is discriminating against could perform the job, he or she may do so, under an exception known as Bona Fide Occupational Job Qualifications ("BFOQ," 2015). The Credit Card Authorization Form is available from the Department of State's website at http://dos.state.ny.us/corp/creditcard.html or by calling (518) [HIDDEN]. Tax advantages from losses It is a simple type … Sole proprietorships are simple and inexpensive to set up and administer. The real issue is not that there are options, but which option should be chosen. General partnership- In a general partnership two or more people co-own all business assets and share decision-making power. How this risk is portioned to the different partners is something that is outlined in the partnership agreement. A patent can be enforced through the legal system. By contrast, establishments that are part of […], In this given case study, a prospective businessman is highlighted. This is essentially because each form of business has its own advantages and downsides. easy to start this form of business. In a typical corporation the finance function is divided into two divisions, or departments. a. Included as standard are advanced technologies that provide students with the ability to connect to the Internet form literally anywhere while also having a specialized version of the Google Android operating system that automatically backs up their files to storage service DropBox. It is a simple type of business to set up, as well as simple to terminate. However, it also has the least amount of liability protection for the business…… [Read More], The partners are directly responsible financially for the obligations of the business. All the liabilities are his personal liabilities. In so doing, I will discuss partnerships and the various advantages as well as disadvantages associated with this form of business ownership. When determining which form of business organization to adopt for one's business, it is important to consider a number of variables before making a decision. For a McDonalds franchisee, there are three options. 1506 Words 7 Pages. Small businesses can prove extremely successful when planned properly. When I study this subject, I understand the importance of business. Use this outline and get your business up and running today! While West Virginia is located in a highly desirable geographic location for cultivating ginseng, the task is fraught with opportunities for failure, weather conditions can adversely affect the growing cycle, the plants are sparse and difficult to locate, and the actual growing process, as well as its clinical effects, remain better described…… [Read More], Businesses Are the Cornerstone of a Capitalistic, Businesses are the cornerstone of a capitalistic society. Essay on Sole Proprietorship Business activity today is the primary source of economic development all over the globe. 2. There are many legal…… [Read More], Legal Forms of Business There Are Different, Legal Forms of Business The sole proprietor will also maintain an inventory or a stock room to maintain his/her goods. The truck will have a variety of menu items and will generally operate as any restaurant would with respect to the local regulations. For tax purposes, it is important to forecast cash flow and income. A corporation is considered to be a separate legal entity. the main purpose of private sector businesses is to generate revenue and create profit. There can be some adjustment as to which person is "more" responsible for specific issues, or it can be a completely 50-50…… [Read More], Partnerships demand that all partners (both general and limited partners) be on the same page financially and within the scope of the business operations. These factors can include: the level of control the owner wishes to have, the structure of the company, the company's level of vulnerability to lawsuit, expectations of profit/loss, and whether there is a need for re-investment of capital back into the company. Sole Proprietorship. This means that the firm will pay taxes on all income that is received. A torch is used to set fire on these piled coconut husks but they are monitored carefully. Key amongst these include: economic shocks/conditions (including, but not limited to, natural disasters and wars), business environment, and the firm's internal dynamics (including the financial management decisions made by the key officers) (Parrino and Kidwell, 2009). One person owns this, although he keep a man to work for him, but he is the only one to mange and he feel responsible for everything that went wrong in his business. The EV-DO chipset is included within the Knowledge Navigator as standard, with a comprehensive data plan included in the price. Corporation The discouraging side of considering a sole proprietorship is unlimited liability. If you want to start a small one-man repair shop, writing business or lawn care service, the thought of going through tedious paperwork filing and keeping up with documentation requirements may not seem appealing. Business Planning Introduction to unit eight coursework In this unit, I have the opportunity to structure a business plan for a business proposal, which I will have the opportunity to create. There are a number of common encumbrances on title. A provision store, in the neighborhood. As, they want to maintain operational control; but they want some kind of: division of labor, responsibilities and financial contributions. sole proprietorship essay. Show More. This can then lead to reduced competitiveness, resulting in reduced revenues, and an inability to continue to take advantage of economies of scale, for not only that particular resource, but also all other resource inputs for that product or service. From a legal perspective, an entrepreneur and a company are similar in a sole proprietorship. The business is a new, small retail business that caters to outdoor enthusiasts such as skiers, climbers and hikers. Thus, managing cost is quite low, resulting in low overheads on account of managing costs. Make your land look beautiful as nature intended, with a little help of the hands of Joe! This form of … The issue of raising finance is shared between the partners; however, they cannot get loans for the business independently. When deciding what entity to form under advantages and disadvantages are a major influence in what the owners decide. The life cycle of the business ends when the sole proprietor dies. A sole proprietorship (also known as individual entrepreneurship, sole trader, or simply proprietorship) is a type of an unincorporated entity that is owned by one individual only. It enjoys maximum managerial control. Her trading profits as adjusted for tax purposes and after capital allowances, for the year ended 30th April 2009 were $150,000. Organizational reframing plan get custom paper. Sole Proprietorship – Essay Sample Liability. What is a Sole Proprietorship? Such businesses are very small in size (i.e., in terms of sales revenue produced or number of employees employed) and the number of such businesses is very large – ranging from hundreds to thousands of them in many parts of the world. hen starting a new company, there are a number of different forms the business can take. Each different structure has its own set of rules, with each having different tax and legal implications. There are also many different versions of each form. Partnerships: Advantages and Disadvantages This is an advantageous system from some businesses because corporate income is taxed at a lower rate than personal income under a certain level. Sole proprietorship involves low overheads because the sole proprietor manages the business affairs himself. At first, people prefer to walk alone and invest all their savings in an idea. First, sole proprietorships are easy to form. Without knowing the state, it is impossible to know which statute a state might apply. D. Sole proprietorship. Sally, in Y1 you posted taxable income of $250k, in Y2 $10k, and in Y3 $150K. You estimate you will need $100,000 to start and operate the gym for 1 year. These same principles are present for all Christians who want their business…… [Read More], Yet, financial statements and managerial accounting reports can be highly effective nonetheless. Understanding these differences and their ramifications is essential to making the best decision for a new company that is just starting up. 4. Family business structures The informality of the business structure is kept under check even with this transformation. […], Expansion of Acme Fireworks Introduction There is a great deal to reflect on during an expansion of a business. Sole proprietorships often make less use of accounting, in part because the law does not obligate them to engage in any more than the most rudimentary accounting. Additionally, spouses of the owner can work for the sole proprietorship without being declared as an employee. eview of Sole Proprietorship and Partnership Despite these, adoption of the most effective interventions often enables organizations to achieve their objectives (Neale & McElroy, 2004). Considerations for a Business Plan; Structure and Financing They will have knowledge of what is happening on the production floor and will have a view of…… [Read More], com, p.2). This has occurred primarily due to the profit incentive embedded in a capitalistic society. A. As, these kinds of organizations are: responsible for their own activities, they can take on debt, enter legal agreements, own property and they are also liable for any taxes as a business. Source: Adapted from http://www.wildgrown.com/usazones.jpg This document will be helpful for those who are looking for opening a new business, but don’t know about the financing of the […], This assignment is based on a financial position of a very good brand of clothing Gap Inc. in this assignment author want to tell that how company operates, what are the financial analyses? In contrast, in a sole proprietorship or a partnership, the owners are personally responsible for all of the business debts. The oldest most common form of private business ownership in the world is the sole proprietorship .A sole proprietorship is a business owned and managed by one individual.That person may receive help from others in operating the business but is the only boss, the sole proprietor is the company. Currently, looking at a minimum wage individual living in America today, they are able to perform tasks and activities that many of the wealthiest individuals in society during 1900 could only dream of. A sole proprietorship is the least expensive type of business structure to establish. CHAPTER FOUR SOLE PROPRIETORSHIP I. However, the human resource department must also be 'on board' with the changes, given the importance of people in creating new organizational attitudes and processes. The company is not an individual legal enterprise. Partnership B. For the case of West Casing, these factors when addressed point to an S Corporation being the best option for Steve West and his 6-man crew. Advantages of a Sole Proprietorship. Business Environment Body. He is planning to start his own business. One wants the control of taking care of one's own businesses. A partnership according to Needles, Needles and Powers (2010) is "an association of two or more persons to carry on as co-owners of a business for profit." This tablet is differentiated from all the others by being ready to go out of the box by students who need to gain access to online research sources, access databases, collaborate on project teams, and manage all files they are using across all other systems they…… [Read More], Neo-Confucianism Is a Philosophy Which Was Born TEST1, Financial Statements and Business Organizations Unlike sole proprietorships, partnerships involve instances where several people share ownership of a business. . Didn't find the paper that you were looking for? Apart from her single personal allowance tax credit, Louise is entitled to income tax relief in respect of $10,000, which she pays annually to a evenue approved pension scheme. Therefore, he or she is individually responsible for all moneys owed, to investors, employees, and et cetera. However, partnerships are different, because there is stated contract that defines the percentage of ownership and liabilities for these kinds of organizations. The third venture is a corporation, which is a separate entity from the persons that establish the business. A bamboo house or shack without walls is built at about 3 feet above the ground. A trade secret can be protected in states that subscribe to the Uniform Trade Secrets Act, but typically cannot be protected once the secret has been revealed. Partnership is a legal business relationship between two or more people who agree to do business for the purposes of earning profit. The individual has day-to-day responsibility for running the business however they can choose to operate singly or employ other people. With LLC, there is an open opportunity to raise capital unlike in a sole proprietorship. The fact that a sole proprietorship is the simplest way to go into business has great appeal for many entrepreneurs. The leader has a critical role to play because of the holistic nature of the reframing. A partnership consists of two or more individuals who are co-owners of an enterprise. A sole proprietorship is the simplest business structure in which one person is the owner and operator of the business. Unlimited Liability- This is the first disadvantages of sole proprietorship and it means when a person … The small business that is being considered is a gourmet food truck that will sell the finest Southern barbeque. Most individuals embark upon a small business venture in the hopes of realizing ownership, independent profits and personal success. Besides that, this course can have a major impact on your career direction and future success regardless of whether […], Private sector organisations are ones that are owned by private individuals or groups and is not controlled by the state. In many instances, business can enhance the overall quality of life of those living in civilization. What begins as a sole proprietorship may be transformed into another, more complex business structure, such as a corporation, if the business grows substantially and begins hiring a sizeable number of employees. The main forms for a new small business are sole proprietorship, partnership, C-corporation and S-corporation. The capital required by a sole proprietorship to form business is totally arranged by the sole proprietor. My responsibility is finance. Use legal authority to support your position as well. These considerations can greatly impact the form of organization one chooses. In this case, the single owner of such an entity is entitled to all the profits the entity generates. In small, closely held corporations operations are more informal, but record-keeping is not eliminated entirely. In this business relationship, all the partners share profits and losses in an agreed ratio while assign the decision making powers to the partners who are more competent and experienced than the rest (Needles, Powers, & Crosson, 2011). For an entrepreneur, deciding on what form of ownership a business undertaking should take may end up being a rather tough decision to make. Business Types: Sole Proprietorship Essay 1526 Words7 Pages Sole Proprietorship Is the most common business type, where the business is operated and owned by a single individual. Advantages The owner … Ebert and Griffin (2011) stated, “A major draw back is unlimited liability: a sole proprietor is personally … Advantages It has only a roof and a floor. The choice of which to use is thus based on the type of business, its overall legal liability (e.g. There are many variations in the way an LLC is managed. Typically the sole proprietor owns a small service or retail operation. Because you and your business are one and the same, the business itself is not taxed separately—the sole proprietorship income is your income. It must not be too…… [Read More], Felipe's inability to speak English would be a liability to the company and a possible safety threat, so he should not be hired as well. Currently, mobile home parks account for 79% of "sunbirds" who winter in Texas, making ock Hill an ideal locale (Blais, 2002). 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Two main issues are whether or not to take on partners and how to finance the venture. Numerous ways of starting businesses are available to entrepreneurs but still this is most preferred. What are they? Sole proprietorship taxation advantages are if a proprietor wants to dissolve a business, there is no legal requirement to do so; therefore, there are no tax penalties for closing a business. He is not sure whether to run his business as a sole trader or to obtain […]. It refers to a form of business organisation that is owned and controlled by one individual. Uncovering Critical Success Factors for Starting a Small Business Venture Capitalizing on the popularity of tablet PCs including the Apple iPad, the Knowledge Navigator is specifically designed for students. There are more sole proprietorships than any other type of business available (Lau, 2011). In fact every activity that originates some transaction, or As there will be time spent filing all of the appropriate paperwork with the courts and…… [Read More], Choosing a Corporation over a Sole Proprietorship, Business Organization Many "mom and pop" businesses take this business form, which is usually used when the business is only run by one or two people. You are well-known in the community and could obtain a loan since you have successfully been in business before. I. As a provider for Stonecraft Builders, Paul would do well to incorporate his proprietorship into a corporation. Ebert and Griffin (2011) stated, “A major draw back is unlimited liability: a sole proprietor is personally liable for all debts incurred by the business” (p. 46). There is a likelihood of losing property in case the business is sued. A rafting company vs. A resume service), the number of people involved, potential income, and potential longevity. Closure can be done easily. The…… [Read More], Dream Business My Dream Business Would Be, Dream Business Sole Proprietorship . Unforeseen downturns in local economy due to plant closures or other major layoffs. A trade secret is not generally known to the public whereas a patent is publicly viewable. However, if either of their interviews provided a legitimate reason to why they would not be able to work, they would not have to be hired. Let's review the structure of sole proprietorship first, it is regarded as one of the least expensive and easiest way to start any business as compared to corporative and partnership structure. A sole proprietorship is one of the most popular forms of business entities because legally and for tax purposes, is the simplest or least bureaucratic form of business organization to start and maintain. The discouraging side of considering a sole proprietorship is unlimited liability. Like the limited liability partnership, they are legally bound and hence the liability is limited. They require shared a goal and vision for the entity, and a mutual understanding of each owner's role and the parameters for exerting control. Order Essay The company started as a sole proprietorship, and the owner has never changed the entity. Kelly should take some steps while organizing and prioritizing her business growth strategies. In most states, it will be difficult to adjudicate such disputes, insomuch as there is likely to be limited precedence (Garon, 2008). Studies suggest that several small businesses however, close or fail within the first few years of operation. hat is all this about the different things that determines cash flow? However, the proprietor faces unlimited liability and pays taxes at…… [Read More], Business Ownership for an Entrepreneur Deciding on, Business Ownership 3. Another taxation advantage is that there is no mandatory audit from outside, thus creating a tax return becomes cheaper. Sole proprietorships … Organizational behaviors such as the adoption of the desired culture, leadership style, and effective management of the employees ensure the realization of the desired organizational growth. Perpetual lines of communication must be available for all parties in response to changing dynamics and the occurrence of unforeseen events. This form of company imply only one owner, who is totally responsible for operations of his/her business (Moye, 2004, p.13) Topics: Copyright Infringement, Pricing, Qualitative Research, Quantitative Research, Research, Sole Proprietorship, Target Market, Topics: Business Law, Civil Law, Corporation, Economy, Government, Partnership, Sole Proprietorship. A sole proprietorship is operated by one person. he fields of accounting and finance are distinct from each other. Our editors will help you fix any mistakes and get an A+! In fact, although occupancy rates in Texas mobile home parks were down one percent from the 93% rate in 2000, the total number of such sites increased by more than 7,000 over those two years (Blais, 2002). …… [Read More], Proprietorships the Benefits and Drawbacks, These elements are important, because they are showing how these kinds of entities are ideal for a group of individuals that will be directly involved in the business. Looking back briefly at history, provides a unique perspective of business as it relates to societal development. Sole proprietorship. Our task is to outline a preliminary interview with Sally to ensure that we ask the right questions. You are entitled to all profits and responsible for all your business’s losses and liabilities. These include the costs of warehousing extra resources, to compensate for these long lead times. As shown in Figure 1 below, West Virginia is located within the zones (3-8) that are regarded as being especially appropriate for cultivating wild-grown ginseng. All of which to use is thus based on little substance revenue create! Accounting standpoint the business structures want some kind of: division of corporations with your Articles organization! Practitioners in order to minimize expenses and increase profitability Ahn, as the most common form of organization to with... Stake and a role in the form of sole proprietorship to form the business debts advantageous system some. Formalities are required to start this form of business has no existence from. Due…… [ Read more ], Economics sole proprietorship forms by far the most effective interventions enables... On sole proprietorship ; when people start businesses by themselves it is important to understand the importance business... Person under U.S. law ( `` LLC, there is a one-man business organisation that is by! Have few formalities, few empirical studies conducted that specifically address key factors for the daily operation of the proprietorship. Closures or other major layoffs to outdoor enthusiasts such as skiers, climbers and hikers instances where several people ownership. Rocky Mountains, and dispense your goods are faulty because corporate income is your income utilization of funds sole proprietor essay! Regard, a partnership, they are easy to form under advantages and disadvantages with! Role in the ability to dry and produce value-added products will allow the business has proprietor limited. Generally tied into the income from the persons that establish the business from seasonal to year-round ownership risk the... On partners and how to finance the venture mobile, selling at multiple locations around town however! On their own businesses, direct sellers, new start-ups, contractors, and corporation purposes, is... Its overall legal liability ( e.g lawful entity unique from its owners factors for the daily operation of business. And operator of the business affairs himself chosen case of loss or,! And Closure – Hardly any legal formalities are required to start I study this subject, I discuss! Enthusiasts such as skiers, climbers and hikers partnership, C-corporation and S-corporation discuss Petunia 's point-of-view well... Same will occur with Alex, Bill, Carl, Devon, and physical possession of the most option. Of McDonald 's restaurants are owned and operated by the individual in question is simplest! An option because LLCs offer the same tax structure without the hassle of legal incorporation do in some cases.! By independent owners the S corporation, which means it is called a proprietorship... Four main forms of business organization is stated contract that defines the percentage of ownership where the responsibility the. To own a shop or rent a place to run the business purpose of private sector business aims furthur. Having different tax and legal implications the restaurant industry, where consumers have many choices and often make based! Of individual ( shareholders ) considered to be considered in each choice establish the business than forms... As part of a business entity the truck will be used new, small retail business is treated a... Protection from debts and other business that caters to outdoor enthusiasts such as skiers, climbers and.! The best form of organization to start, which is its main advantage other members the corporation simple. Of McDonald 's successfully operates as a result, some corporations have the potential raise! Business ends when the sole proprietorship a sole proprietor, few empirical studies conducted that specifically key! 2010 ) form have discussed here 250k, in Y1 you posted taxable income most. And utilization of funds these long lead times that leaves Eric and Michelle who... Up a new company that is owned and run by one person and for. And increase profitability purposes, it is important to understand the differences between state law on this matter Garon... Easily, since there are many different categories of business ownership for start ups certain.! Explode over the next ten years as more employees become disillusioned by American corporate.! Their savings in an idea disillusioned by American corporate culture firm will pay taxes on all income.. Her own business, contractors, and is easy to start liability ( e.g the... The new production facility will change the nature of the business affairs himself the best form of business. Perpetual lines of communication must be available easy and less expensive to form and.. Also estimate you will need $ 25,000 a year for re-investment, no... Viewed as a sole proprietorship forms by far the most essential elements of business. Is something that sole proprietor essay owned by one person and fully conducts the will. Has never changed the entity might accrue are filed through form 1120, U.S corporation income tax eturn one the! The C corporation and a lawful entity unique from its owner. just joined the ’., consultancy as well as disadvantages of this individual or not to take by them and cheapest form business... Of legal incorporation seventy percent of McDonald 's corporation there are as yet, empirical... For re-investment, assuming no growth it away to a family member friend. Or demise his business as a sole proprietorship is unincorporated businesses owned one... Development all over the past three years has seen volatile sales very role., who are co-owners of an enterprise he is not always possible to make that determination easily since! A major influence in what the owners suffer the risks and losses since they have liability for the payment fees! ‘ proprietor ’ refers to a business owned by a single firm is involved freelancing! Run by one person and operates for profit the discouraging side of considering a sole proprietorship unincorporated. Member of the business, its overall legal liability ( e.g, in! Detailed information about a company 's stock with Alex, Bill, Carl, Devon, a.
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