Every business brings in money and needs a qualified accountant to keep track of their finances. People every year need to file their income taxes and often have questions about dependents or what they are allowed to claim to receive money back. I would like to start my own business that helps people with their finance questions and offers help with taxes or keeping track of profits earned from their businesses. I will start my business in the office of my finished basement. This is the perfect way to start my business and earn a profit because I will not be paying rent or taxes on an office space in a building. I will be the only employee in my business, running it as a sole proprietor. Eventually, as my business grows, I could hire a secretary or an assistant if I got more clients than I could handle on my own. At my bookkeeping business I will offer services for keeping track of finances for small, locally owned businesses that do not want to keep track of loss and profits on their own. I will also offer help with income taxes and filing for individuals seeking guidance. As a sole proprietorship I will also be personally liable for all financial obligations for my business. I will report all income and expenses on my personal tax return. As the owner I also have all managerial control. I am able to run my business how I would like to, choose the hours I work and name my own prices for my services. Another advantage is the filing fee for a sole proprietorship is only $50.00. A sole proprietorship is the most common form of a business organization but it does have some disadvantages. The owner is held personally responsible for all debts and liabilities. I will need to buy insurance for my business that covers any miscalcu... ... middle of paper ... ...ber, you are not able to receive any benefits and neither will your employees. A general partnership is formed when two or more parties work together to run a business and make a profit. A partnership agreement is not required, but it is highly recommended to set the guidelines for your business and have them in writing. In a general partnerships, all parties are responsible for the business, and they share all assets, liabilities and profits. All parties are responsible for managing the company and having a set of written guidelines is used to resolve any issues that may arise. Each individual partner files the business’ income taxes with their personal income taxes. There is no taxation on the actual business, income is divided to the partners based on the partnership agreement. Income, deductions, losses, and credits “pass through” to the individual partners.
Partnership – “A legal entity formed by two or more co-owners to operate a business for profit.” (Longenecker, Petty, Palich, Hoy, Pg. 202) In a partnership, the advantage for the owners is the capability to reduce the workload and the financial burden, especially if each partner has management skills that enhances the business. The disadvantages of a partnership such as personal conflicts and leadership expectations, therefore this organizational form should only be chosen once all other options have been considered.
One of the challenges to start up a new business is choosing the kind of business to start.
A sole proprietorship is characterized a business in which one individual (sole proprietor) controls the administration and benefits (Kubasek, 2014). A sole proprietor is the single individual at the leader of
The types of organizational forms are proprietorship, partnerships and corporations. Each has their own advantages and disadvantages. A proprietorship has three main advantages: (1) low cost for start-up, (2) it is subject to few government regulations, and (3) its income is taxed as part of the proprietor’s personal income. Although a proprietorship is a low-cost start-up company, unless the owner already processes the funds, it may be difficult to acquire funds for growth. Additionally, the proprietorshi...
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The core company types offered nowadays is a sole proprietorship, partnership, limited liability company (LLC), and corporations. A sole proprietorship is a company with a singular proprietor that makes all key decisions for the company. A characteristic of a sole proprietorship is that owner is responsible for each and every liability of the company, and the company ceases to exist upon the death of the companys owner. The proprietor assumes all the hazards of the company, and all private assets are used for collateral, even if they are not used in day to day business activities. A partnership is an arrangement involving two or more parties that merge into one entity to pursue a company endeavor for revenue. Each affiliate contributes cash, assets, workforce, labor aptitudes, and each affiliate splits the revenues and debts of the company. Similarly, each affiliate accepts unrestricted personal accountability for the debts of the business. Limited partnerships reduce the amount of personal accountability each individual assumes for the liabilities of the company founded on the percentage each
This means these entities are not taxed on the business level, but on the owner’s individual tax returns. Except with a partnership, each owner pays taxes on their share of the profits defined in the partnership agreement and also pay self-employment tax. To do so, each partner will use IRS Form 1065 and Schedule E to report their share of profit or losses. Each partner also must fill out a Schedule K which is used to break down the partnership’s income into different types of income.
This is a flexible form of business that is considered to be a blend between a corporation and a partnership (Toal & Riley, 2004). This type of ownership provides for a limited liability. It can be taxed as a sole proprietorship or partnership. This is the most flexible form of ownership and its limited liability depends on state laws.
There are many different types of business structures, but if you own and operate a business that it is a sole
The advantages of being a sole trader are, that the work that has been done is your work only, the profits are all yours and that you are self-employed (you are your own boss). The disadvantages of being a sole trader are that you may find you haven’t got enough money to start the business, pay for staff, equipment and stock, you may need help choosing locations, themes and styles and you would be likely to find yourself working harder and longer hours. Partnerships This is when two or more people join together to form a business. Partnerships usually have two to twenty partners. The advantage of being a partner is that the workload is split but so is the profit.
When a business is structured as a Sole Proprietorship, more than likely there is just one owner. Sole Proprietorship are the most common and easiest types of formation since they are not incorporated. Since a Sole Proprietorship is not a real legal entity, legally you are held responsible for anything and everything the business does. If there is an accident or your business is not profitable, your personal assets are at stake. Therefore, anything that you own can be taken from you if you cannot pay. When a person dies or stops doing business, the business easily can no longer exist. Management and the Operations of the business are held by one person only, the owner. When dealing with taxes for sole proprietorship, the income or loss is passed down to the owner personal tax return (1040) as a regular taxable income. Thus there is no special type of form to file for being in business. If the company has a loss, the owner can deduct a portion of their losses from their own taxable income. Trying to raise capital is difficult for th...
Another example of business ownership is a partnership. Examples of partnerships used in business are accounting firms and solicitors firms. A partnership has two or more owners. They work, manage and are responsible for the running of the business. Individual partners may concentrate on a certain aspect of the business where they have expert knowledge. As there is more than one owner, larger amounts of capital can be fed into the business via personal funding or bank loans. Partnerships have an unlimited liability.
Mired in dread by most and oft an exercise in futility, business owners spend agonizing hours tracking and paying obligations, calculating payroll, balancing checkbooks, and soliciting payments from past due accounts. From a place of naiveté, most business owners initially deny delegating these fundamental tasks to a seasoned bookkeeping professional whereby reasoning this method of business operation will improve their bottom line. Furthermore, each year a growing number of business owners find themselves scrambling in a near panic, sometimes successfully, sometimes not, to assimilate records in order to present to a CPA to meet tax deadlines. According to Jason Nazars’ article “16 Surprising Statistics
Management of the business entirely lies with general partners. They are also liable to debts, activities and obligations of the limited partnership
Starting your own business can be exciting and it can become a well- rewarded experience. Being your own business includes great benefits, create your