Description of Business Structuring - Essay Example

Business Basics (Assignment Business basics It is important to understand how to structure a business at the start-up as the status of the business has legal implications. In this case, Martha launched Apex as a sole proprietor business. This is probably because she understands the benefits of sole- sole-proprietorship business and hence decides it is the best structure for her business. She understands the simplicity of forming a sole proprietorship business. It requires very little paperwork while filing the business name and only a small fee is charged to complete this paperwork.

In addition, Martha is not required to file legal documents or annual reports, as it is required with some other business structures (Madura, 2007). Secondly, Martha knows that she will be the sole owner of the business when she starts up as a sole proprietor. She is going to possess all authority and decide on behalf of the Apex Company. She will also have the mandate to sell or transfer the company to another individual business and make important business decisions at her discretion. 2. Probably, the accountant's concerns about running a sole proprietorship business are the risks that are involved mainly to the owner of the business.

Legally, these risks are not treated separately from the business. They seem to be aware of some of the disadvantages of sole proprietorship business. They know that a sole proprietorship business has a liability disadvantage or risk. When Martha starts up Apex as a sole proprietor business, she will be held directly responsible for any debts, losses, or violations that come from the business. For example, if the company incurs debts that must be paid back, Martha as the sole owner will repay the debts from her funds.

Again, she can be sued for any unlawful acts done by the employees, which is unlike other business structures. Additionally, if she becomes deceased or incapacitated the business will not continue since the owner and the business are treated as one (Madura, 2007). 3. A partnership business is formed by two or more people who wish to come together to start a business. For a new business structure, the partnership is a good choice of legal structure (Madura, 2007). This type of business has several advantages and disadvantages as discussed below.

Advantages:-Capital- Because of the business nature, the partners are the ones to fund the business with the start-up capital. The more partners they are, the more money they contribute to the business, which allows potential growth and flexibility. This also means more profit, which will equally be shared among the partners. Shared responsibility- the business partners share the responsibility of running the business. This allows them to exploit their abilities to the best.Disadvantages:-Disagreements- This is one the most obvious disadvantages of a partnership business.

People tend to have different opinions on how the business should be run, what the best interests of the business should and who should do what. This creates disagreements that can harm the business. Profit sharing- profits are shared equally among partners. This can bring inconsistency where one or more partners are not putting a fair effort share in running or managing the business. 4. Yes, it is possible to employ a sole proprietorship business structure for larger, mature businesses without outgrowing the structure.

The sole owner can decide to involve other people in her business under an agreement. These people will act as business partners but the business name and the ownership of the business remain with the starter or the sole owner of the business. In this case, these people joining will have to sign an agreement that shows that they have agreed to act or do business under a sole owner business. They have to agree on how to share profits and the financial risks and liabilities that may arise. They have to agree on whether the sole owner remains the head or rather the manager of the business.

This kind of business structure allows the business to grow more with less payment like tax payment since it is still treated as a personal business by the regulatory body.