Business forms Research Paper Example | Topics and Well Written Essays - 1250 words

Business forms - Research Paper Example In order to perform a succinct selection of the business form, consideration of taxes, legal plus accounting issues will be vital. Sole proprietorship This is a business organization owned by a single person who is responsible for entire operations of the business. Advantages and disadvantages A sole proprietor is responsible for various decisions that affect the business. He is accountable for the business because he conducts all transactions. Any operations such as sales are possible through the authority of the owner. In sole proprietorship, the owner of the business enjoys exemption of taxes such as corporate tax (Goldman & Sigismond, 2011). Those starting a new business enjoy the presence of few trade requirements. Legal costs are considerable, hence, making it easier to run the business. A sole proprietor benefits from the profits acquired because he has not formed a partnership. Sole proprietorship has limitations where the owner is responsible for debts and other roles of the business. In case of losses, the owner suffers alone with no one to share the loss. Sole proprietorship is liable to various risks that associates workers conduct within the business. Financial statements for sole proprietorship The cash flows statement provides a description of money movement within a time frame. It indicates the amount at the commencement and termination of the period. The statement of changes in equity for the owner relates income statement and the balance sheet by indicating the increases or decreases of the capital (Goldman & Sigismond, 2011). A balance sheet depicts finances of the sole proprietor by including assets plus liabilities and capital. The financial performance document displays earnings for a known timeframe and depicts the net income of the owner for the period indicated. Tax, legal plus accounting implications A sole proprietor faces challenges when dealing with accounting issues, for example, it is exhausting to handle records of various operat ions without making errors. It consumes time to scrutinize both purchases and sales in different documents. For sole proprietorship, taxation is similar to other business forms where it occurs in income-tax rates. Improper accounting may lead to tax complexities. Sole proprietorship does not have protection enjoyed by other companies. The owner becomes responsible for various issues that result from operations (Goldman & Sigismond, 2011). Partnership Advantages plus disadvantages This is a form of business ownership in which people come together and form a business based on their interests. It involves two or several people who implement a business idea after careful planning. Persons intending to start a partnership find it suitable because they can raise funds easily (Pride et al., 2011). Partnership can grow tremendously because people can share ideas to enhance its improvement. Partnership attracts various people with intentions of commencing businesses because partners can shar e loses plus profits that arise from business operations. Although it is advantageous, the business form has some limitations such as sharing of profits plus losses. All partners become accountable for the conduct of the entire fraternity. There is a possibility of benefits being limited by taxes or returns. The lifespan for a partnership can be short because members may choose to leave for other endeavors (Pride et al., 2011). Financial documents for partnership Partnership utilizes the common statements such as balance sheets, cash flows, income and owner’s equity statements (Pride et al., 2011). This is similar to sole proprietorshi