The Importance of Good Accounting in an Organization

Topics: Corporation, Business, Entrepreneurship Pages: 2 (683 words) Published: June 24, 2008
Good Planning in an organization
The first decision that the entrepreneur must make is what type of business he/she wants to start. The decision should be based on the amount of knowledge and skill that they have in the field that they are considering. The better that they know the industry, the stronger there likelihood they will have a successful business. THESIS. Business can operate under three legal structures which are: Sole-proprietorship, Partnership and a Corporation. The understanding of these is crucial to the decision of which structure is the best one for the entrepreneurs business. In a sole-proprietorship, the owner retains total control of all the decisions that need to be made. The ability to raise capital is limited by the financial resources and the credit worthiness of the individual owner. The owner has the ultimate liability for all the actions and debts of the business. A sole-proprietorship is not a separate taxable entity. The individual owner reports business revenue, expenses and net income (or loss) on his/her individual tax return form. The business ends with death of owner unless previously sold or transferred.In a partnership, the control is shared by the partners in accordance with the partnership agreement. If there are two partner¡¦s the agreement does not have to be fifty-fifty. It can be what ever the two decide on in the beginning. The ability to raise capital is expanded somewhat as partners are able to pool their respective financial resources. Both partners have joint and several liabilities for actions and debts of partnership. The partnership is not a separate taxable entity. An information return must be filled out each year to report partnership activity; however, individual partners report their respective shares of income (or loss) personally. The business ends with death of a partner unless written partnership agreement contains transfer conditions.With a corporation, the day-to-day control rests with the hired...
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