Small-Business Idea Paper Essay Example | Topics and Well Written Essays - 750 words

Sm both-Business Idea Paper - Essay ExampleAdvantages and disadvantages of sole proprietorship Sole proprietorship is the most popular and the longest practiced frame of business organization. Some of its advantages be the ease with which it can be established and the ease with which it can be wound up. The processes are cheap, and are free from court-ordered potpourrialities because only establishing a business requires registration of business name and work permit. The proprietor is entitled to all profits from the business and this motivates efforts for a victorious venture. Pride in the proprietorships success is another advantage of the appoint of business organization and acts as an incentive among sole proprietors. This further facilitates well-grounded competition among players in the form of business organization and has positive impacts on macroeconomic aspects such as gross productivity level of an economy. Simple speak to to tax that treats business revenue as the proprietors income, is another advantage because of the low tax rates and ease of filing tax returns. The form of business is also flexible because the proprietor is the boss. Ease of decision making due to lack of formal or moral obligations for consultations is another advantage (Pride, Hunges and Kapoor, 2011). disdain the many advantages, sole proprietorship has many disadvantages. The business has unlimited liabilities and this means that the proprietors personal resources can be seized to settle business debts. The enterprisingnesss life is also limited to that of the proprietor and capital base are limited because of lack of sufficient security for accessing capital. The owner also suffers all the losses and this may be significant to affect sustainability (Pride, Hunges and Kapoor, 2011). Types of financial statements for each form of business organization Financial statements for a sole proprietorship form of business are income statement, balance sheet, cash flow statem ent, and statement of owners equity. Income statement outlines costs and expenditure in the merchandise processes towards determination of terminate profit. Statement of owners equity traces, and accounts for, a business accumulated capital while the balance sheet offers an account of the business financial locating by accounting for the assets and their sources. The statement of cash flow accounts for cash receipts and payments within an accounting period. The financial statements also apply to other forms of business organizations only if their contents vary in complexity. Accounting for partnerships however includes partnership account besides these (Warren, Reeve and Duchac, 2011). Consequences of tax and legal implications Different legal and tax provisions apply to the different forms of business organization. Sole proprietorship is not subject to legal requirements and its taxes are treated as the proprietors personal income. Partnerships are subject to legal requirements such as registration of official business name, if the business does not operate under partners names, and subjection to formal documents such as article of association, memorandum of association. Partnerships