Small Business Idea

Small Business Idea
Alicia Lopez
ACC 561
July 17, 2012
Michael Bradford

Small Business Idea
      It is important for an entrepreneur to consider what type of business to form. It can be a sole proprietorship, having one business owner, a partnership, having two or more owners, a corporation, which is a legal entity owned by shareholders, or a limited liability corporation (LLC), which limits the liability to owners of the entity‚Äôs debt and obligations, and its income and losses are passed through to the owners as if it were a partnership. Each type of business organization has some advantages and disadvantages.
Advantages and Disadvantages
The advantage of a sole proprietorship is that they are easy to formulate and dissolve. There is low overhead, and start up costs. The owner reaps all of the profits. A sole proprietorship has a lesser amount of regulations. The proprietor does not have to worry about corporate income tax. They can just file their personal income tax. The disadvantage would be that there is unlimited liability. The owner is personally liable for the business, and any employee actions at the business (studyfinance.com). There is a limited life to the business. If the owner passes away, the business is not passed on to their relatives.
A corporation is considered an entity by itself. It has unlimited commercial life (studyfinance.com). The advantages for a corporation are that it has room to sell stock and raise capital. It can transfer ownership by selling stock. It also has limited liability. The shareholders will not lose any stock or money if the corporation should encounter legal obligations against it. The disadvantages are that there are regulatory restrictions. Corporations are monitored by government agencies include state and local government. Not being in compliance with regulations can cost the corporation (studyfinance.com). A corporation can experience higher cost for operations and organization. Articles have to be...