Acc562 Small Business Idea Paper

1321 Words May 4th, 2013 6 Pages
Small Business Idea Paper Introduction: Recently, the government released funds for persons willing for establishing a small business. This releasing funds’ concept will form many jobs, and the economy will be stimulated by it. For the owner of a small business, the first step is to determining which business form is best suited to his or her ideas. Furthermore, it is essential for the owner of business to evaluate implications of legalities and tax related to his or her business forms. The purpose of this paper is to define the advantages and disadvantages of the four different forms of business organization, including sole proprietorship, partnership, C corporation, and S corporation. The paper will define …show more content…
Statements of cash flows will define whether or not a credit limit for a loan will be established. Deductions, profit, and losses, and tax liabilities are stated in the owner’s federal income tax return because a sole owner is have the smallest amount of expenses. For that reason, the sole proprietor is responsible for all tax liabilities. Partnership “Partnership is a business organization in which two or more individuals manage and operate the business. Both owners are equally and personally liable for the debts from the business” (Investopedia, 2013). Business losses, profits, debts, and expenses are shared by the Partnership. Partnership is equally liable and responsible for every issue related to partners or of any of the partner. There must be one general partner in the partnership. A drawback of forming a partnership includes the retirement of a partner that can become the reason for issues amid the partners, and uncertainty as well as tension could take place amid the customers, lenders, vendors, and employees related to the business. For the business, there is no need of paying taxes by the partnership, in its place the losses and profits are stated to the central government and every partner is accountable for filling his individual federal tax return. Statement of retained earnings and income statements are the financial statements related to partnership. The organization’s profits and losses are

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