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A basic business plan includes: a description of the business (purpose, goals, and mission statement), a description of how the business will be marketed (market research, target demographic, and consumers), financial data (loans, cash flow analysis, and income projections), and how the business will be managed (employment, sales, and sales strategy) (SBA, 2007). Many entrepreneurs put off writing a business plan because they argue that they do not have the time, or it will not be useful because the market changes too fast (SBA, 2007). However, this plan acts as a blueprint for the new business that is being built. Therefore, a business cannot be started without a business plan because it will help start, guide, and promote growth for the new business. Strategic planning involves fully understanding the new business, its strengths, weaknesses and assessing how well it will do in the business environment to develop clear goals, objectives, and a mission. In addition, the potential business owner will be prepared for any obstacles that are encountered through the business
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There are 5 basic structures to choose from: sole proprietorship, limited liability company (LLC), general partnership, C Corporation (Inc. or Ltd.), and sub chapter S Corporation (Inc. or Ltd.). (Kathleen, 2001) The sole proprietorship structure is usually owned by one person, it is a simple and inexpensive form of business. The business is operated by the owner, the owner has full responsibility for all business debts, the business is freely transferable, and the owner can report losses and profit on personal income tax returns. (SBA, 2007) The general partnership structure is also an inexpensive form of business that is usually operated by two or more people. Responsibility of business debts, profits, and losses are shared between the partners. An advantageous feature of this structure is that the business does not pay taxes; instead, the partners pay taxes on their personal income tax form. The limited liability company structure is advantageous for small business because it incorporates the advantages of a general partnership. The business does not pay taxes and it provides protection from personal liabilities. The C Corporation is a more complex and expensive structure. “A corporation is a legal entity separate from its owners, who own shares of stock in the company. Corporations can be created for profit or nonprofit purposes and may be subject to increased licensing fees and government regulation than other structures. Profits are taxed both at the corporate level and again when distributed to shareholders (SBA, 2007).” Lastly, the sub chapter S corporation is very similar to the C Corporation. The differences are that the business does not pay double taxes, and the business is taxed like a
There are 5 basic structures to choose from: sole proprietorship, limited liability company (LLC), general partnership, C Corporation (Inc. or Ltd.), and sub chapter S Corporation (Inc. or Ltd.). (Kathleen, 2001) The sole proprietorship structure is usually owned by one person, it is a simple and inexpensive form of business. The business is operated by the owner, the owner has full responsibility for all business debts, the business is freely transferable, and the owner can report losses and profit on personal income tax returns. (SBA, 2007) The general partnership structure is also an inexpensive form of business that is usually operated by two or more people. Responsibility of business debts, profits, and losses are shared between the partners. An advantageous feature of this structure is that the business does not pay taxes; instead, the partners pay taxes on their personal income tax form. The limited liability company structure is advantageous for small business because it incorporates the advantages of a general partnership. The business does not pay taxes and it provides protection from personal liabilities. The C Corporation is a more complex and expensive structure. “A corporation is a legal entity separate from its owners, who own shares of stock in the company. Corporations can be created for profit or nonprofit purposes and may be subject to increased licensing fees and government regulation than other structures. Profits are taxed both at the corporate level and again when distributed to shareholders (SBA, 2007).” Lastly, the sub chapter S corporation is very similar to the C Corporation. The differences are that the business does not pay double taxes, and the business is taxed like a