How to start a business

Topics: Balance sheet, Financial statements, Economics Pages: 8 (2081 words) Published: November 4, 2013
1.0 Executive Summary
The main purpose of this report is to give some advices to Peter who retired as an engineer and never contact with business in the past. Through this report, firstly, you can see several forms of business organization which are sole proprietorship and partnership. Secondly, it will show that some background about Peter and some advices to him. Then, it is about introduction of accounting and benefits of an accounting system with a flow chart of a simple accounting system. Finally, it is conclusion about this report.

2.0 Introduction
Peter, you used to be an engineer, therefore, you never contact with business in the past. Do not worry, I will introduce some information about business in this e-mail. Of course, I will give you some advice. First of all, I will introduce several form of business organization. Do you know? There are two types of this which are sole proprietorship and partnership.

3.0 Situational Analysis
3.1 Form of Business Organization
3.1.1 Sole Proprietorship
Sole proprietorship, is a personal investment management, to all individuals and control, from individual to assume business risk and enjoy all the business income of the enterprise. By way of individual proprietorship business owned enterprise has unlimited economic responsibility, bankruptcy when debit can withhold the owner's personal property. For example, a hairdresser, a plumber, an accountant, a lawyer, a trainer etc. Of course, there are some advantages of sole proprietorship I want to you know. On the one hand, enterprise assets ownership, control, the management right, and the right of profit is highly unified. This is helpful to conservative and enterprise management and the development of the secret, which is beneficial to the owner individual entrepreneurial spirit of the development. On the other hand, there are also some disadvantages of sole proprietorship. It Vulnerable to the host country political, economic, cultural and other uncertain factors to the influence of large business risk; besides this, high investment and cycle is long, the cost benefit difference and prompt less profit.

3.1.2 Partnership
The partnership enterprise generally refers to by two or more individual joint venture enterprise, a partner to share enterprise income, and operating losses Shared responsibility. It can be part of the business partners and the other partners shall only investment and share in profits and losses, and can also by all partners together. Its characteristic is the scale is small, the capital requirement smaller. For example, professionals-lawyers, doctors, accountants etc. There are some advantages of partnership. Firstly, the partnership business is easy to establish than the sole proprietorship business. Secondly, due to the partners share the partnership enterprise management risk and responsibility, the partnership business’ risk and partnership are lower than the sole proprietorship business. Of course, there are also disadvantages of partnership which sometimes enterprise liabilities will beyond the original owner of enterprise investment, so they need to use their personal property debt to service. In addition, the partnership business is hard to get a lot of money from outside for their business.

3.1.3 Advice
Peter, you retired as an engineer and never contact with business in the past. So, in my point of view, I think you should choose the form of business organization is partnership. Because partnership is the way of practice, they are between the partners (Joint and several) jointly undertaking liability risk. Do you remember I told you last week? I also start my business with my friend recently, would you like to join us and make a partnership? There are five characteristics of partnership. First of all, Life is limited that is the partnership is easier to establishment and dissolution. The Second characteristic is unlimited liability which is partnership organization as a whole to...
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