ACC 561 Week 2

$5.00

You are interested in establishing a small business, and you must decide which form of business organization would best suit your unique product or service. Consider legal, tax, accounting, and other implications when selecting from the four business types.

 

Write a paper of no more than 1,250 words discussing your small-business idea. Include the following:

 

  • The advantages and disadvantages of the different forms of business organization, which include the following:

 

  • Sole proprietorship
  • Partnership
  • C corporation
  • S corporation

 

  • The different types of financial statements required by law with each form of business organization, including different names for the equity sections. This does not mean an overview of what is on each statement. What entities are required by law to have statements and what is the difference in the equity?

 

  • The following consequences associated with each form of business organization:

 

  • Tax implications
  • Legal implications
  • Accounting implications, such as SOX, GAAP and FASB

 

  • An explanation of the unique product or service your small business provides
  • Your choice of business organization form for your new business
  • Your rationale for choosing this form of business organization

For tax implications for each entity, your book only says that some entities have advantages. Do some research to determine what the tax advantages and disadvantages are for each.

 

Legal implications refers to liability and continuity of the entity in the event of death or the withdrawal of a partner,owner or shareholder. Be sure to be specific about liability issues, particularly with the partnership.

 

For SOX ,GAAP and FASB, what entities are required by law to comply? Are there best practices?

 

This  will require a good amount of credible, peer reviewed research. Also, make sure the research is current (within the last few years). I have had students use old sources and the information was outdated.

 

This assignment is meant to force you to be clear and concise in your writing. If a sentence is not conveying a fact, it is fluff.

 

 

Description

ACC 561 Week 2

Introduction

Determining which form of business organization to operate as is imperative when opening a business. One needs to be knowledgeable of the intentions of the business, who is involved in the formation of the business, and components needed for a business to succeed. The business established gives a good determination of which form of business organization to pursue. In this paper, one will discuss a new small business and the goods or services it provides. Also, one will discuss the different forms of business organizations and which will work for the new business.

Business Organization

“Sole proprietorship is the simplest and most general structure chosen to start a business. It is an unincorporated business owned and run by one individual” (Small Business Administration, 2014, para. 1). One main advantage of sole proprietorship is having one owner, which means one would be entitled to all the profits. Another advantage to a sole proprietorship is that one can make all the business decisions without consulting with anyone. However, one who chooses a sole proprietorship assumes responsibility for debts and liabilities, which can become a burden to some business owners. Moreover, when operating as a sole proprietorship it is hard to raise money as investors and banks are leery to invest financially due to the lack of credibility.

A partnership is “the single business where two or more people share ownership. Each partner contributes to all aspects of the business, including money, property, labor or skill” (Small Business Administration, 2014, para.1).A partnership is much like sole proprietorship except instead of one owner, there are two or more. There are three general partner agreements; limited, general, and joint venture. Partnerships are seen as inexpensive and easy business structure. However, because partners share the responsibility for debts and liabilities it also means they will are responsible for the liabilities of the other partners. Conflict is another disadvantage to a partnership as not all individuals will agree on decisions of the business or sharing the profits, which can cause tension and discord.

S Corporation’s “are a special corporation created through an IRS tax election” (Small Business Administration, 2014, para. 1). This form of business organization will not have owners, but shareholders who hold a stake in the business. One advantage of an S corporation is the tax savings because only wages  ofan S Corp shareholder employee are taxed (SBA, 2014). Tax credits are also another advantage meaning that certain expenditure can be written off. Noted disadvantages of an S corporation are that there is a stringent operations process meaning shareholders are required to gather for meetings.

 

Learning Team Charter aswell as wrap xls attached

 

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