Business Law

American society has always been optimistic towards their future. The American nation is a capitalistic country. Many individuals are influenced to start up their own businesses with their own ideas.  The government helps and regulates all business. There are three types of businesses sole proprietorships, partnerships and corporations. A sole proprietorship would be my best choice to start up my own business.  This form of business is the easiest to start. In the states a federal license or permit is needed to sell products or serve a service to the public. A license is required in order to begin the business operation. Income or loss the owner is accounted for on the tax return. “Flow thru taxation” is the term used to state that the owner’s incomes flows through the tax return. I would keep contact daily with my accountant. The business would not be taxed twice as there would be in corporations. It is simply taxed once. I would not need contracts stating two people joining in and making an effort to make a business work as there would be in partnerships.  I would just rely on myself. I have better confidence of trusting myself than trusting others in forming a partnership. It is a gamble and a risk to be liable for the entire business.  Life is pretty short and taking a risk would either mean it was worth it or you learn from it.

Since it’s the easiest form of business to start why not take full advantage. But there are advantages and disadvantages. In a sole proprietorship there is limited capital which means the owner would have trouble getting the supplies and materials needed for. But it would also seem harder to borrow money and loans from the bank. A loan from the bank seems like the easiest way to earn money but because of unlimited liability banks have trouble lending their money to just one person. It would cost them a lot. The owner  is liable to pay back the loan borrowed. Banks have trouble trusting that one person. That is why most businesses are mostly started by the money that was saved or earned through couple of years. It might take years for one to have all the materials and necessary start up their own business. It would also be a hurdle to overcome on how to get all materials necessary. In my business the laundry mat would need all the resources. Laundry mats consists of washer machines, drying machines. The place should be regulated with fire extinguishers in case of any emergency with the manufactures machinery. The structure of the building would be tested to hold as many people and machines and keep many safe. The adults and kids would be seated in comfortable seats and can be entertained with televisions or by radios. Video machine booths can be bought just to entertain kids. Cash registers would be operated by 2-3 employees where they will be managing daily all the time.

Time is very important on how much would be needed to start up the business. I would have all the freedom to decide my hours and my employee’s necessary to start my business. Which means I would need great management skills. Most importantly, I would have time to create a business plan. Since most small business are said to fail in the first 5 years a plan should be executed. It is easy to start a business but making it work it’s the hard part. I would have family come dedicate time upon the business. Since one person cannot handle all the work. Family would love to keep the business going and maybe it would run in the family. It can be a whole bunch of workload daily. Small business solely depends on the owner. It is how the managing and dedication and money is used it making the business move forward. There are possibilities of entering into a corporation once the owner decides to grow and make more money.

Partnerships are businesses where two or more people are liable for. It can be simple when two or more friends can enter into partnerships and begin a business. Both can easily have good credit and have greater credit available such as bank loans. They can be loaned money from banks since there is less chance of loss. They would easily buy all the resources and materials needed for the business to start. It is teamwork where they would be sharing skills. Your weakness can be your partner’s strength. One partner can be good in managing while the other can be the accountant or the book keeper. They are sharing responsibilities. Since partners share in the profits they will be working harder to raise enough income. They would have better chances and motivation to do what’s best for the business. It is a team which comes together to make one business work. There are also disadvantages in starting a partnership. Both partners are held equally liable. The person you consider to be a partner should have a background and have good credit, should be trusted by many and should keep no secrets within the business. It is a risk where you are risking daily decisions where both partners have to agree and be in good terms with. A contract is made to state clear terms of what each party contributes to the business and a settlement in case of breach of contract. If one partner simply decided to quit the job the company is dissolved and another partnership would have to be decided on. But the legal contracts can state options one partner can take in case of quitting.

A Corporation is another form of business where one chooses to create a business under the authority of the laws of a state consisting of a person or group of persons who become shareholders. Selling shares of business is an easier way to raise capital. It shows that the liability of the shareholders is limited. Stockholders are limited liable to the company’s debts. Profits can be huge and mostly in the millions and the stockholders won’t lose any of it in case if the company is in debt. Many wealthily stockholders rely on the shares sold daily. They can work for the company and have huge health benefits. Many small business and partnerships decide to enter into a corporation to make better profit and have their name brand as a trademark, where many customers will already know the name that’s put out there. Big investors invest in the corporations. The investors can be a huge attraction for many to come and join and buy stock for a company. The shares are freely transferable. There are also disadvantages in corporations. The corporations are taxed twice and the same profits get taxed twice as well. There are various fees paid to the state and many governmental filings costing one a lot of money.

There is another type of business the S Corporation. Some people choose to form (Subchapter S-Corporation). It is a corporation where an election with the Internal Revenue Service. It allows the owner to avoid dealing with the double taxation of profits and dividends. There are also disadvantages dealing with paperwork and filing. Businesses structures and regulations are strong and firm which help businesses around the nation. The rules and regulations from the federal government help and keep the people safe. Starting a business is easy and profitable. It may be easier to start a sole proprietorship rather than a corporation. But many can receive help from family or friend and start a partnership where there is help and support of a partner. There are advantages and disadvantages for all forms of business. There are endless opportunities for the American people. There optimistic attitudes can lead them to great wealth.

Works Cited

Pride, William M., Hughes Robert J., Kapoor Jack R. Business. Publisher: Boston: Houghton Mifflin Co. 8^th edition.

 “Sole proprietorship/Partnerships/Corporations.” Wikipedia. 5, August, 2005.7,August, 2005. http://en.wikipedia.org/wiki/Main_Page