Literature Review - Forms of Business Essay Example | Topics and Well Written Essays - 1750 words

Literature Review - Forms of Business - Essay Example Because of this, an accountant must understand the different forms of business so they are able to provide the best information for the particular business. There are many different types of business structures. These include sole proprietorships, partnerships, and limited liability companies. In order for an accountant to do well with business, he or she needs to understand how each of these business structures work. Relationship of the Topic to Future Career Goals I have chosen this topic because accountants are needed all over the world. Many organizations provide many services for profit. Of course, accountants are also needed in the non-profit sector so the prospects for careers are endless. Many companies have gone bankrupt because they did not do well with their money. For example, companies like Enron, Qwest, and others had problems because they did not handle their financial affairs well. Because of this, an accountant can specialize in many different areas. An individual co uld decide to become a financial accountant, a managerial accountant or a cost accountant (Peavler, 2013). The field of accounting seems very open and it seems more dependent on an individual’s decision as to which aspect of the field they choose as a career. I wanted to investigate the different business structures and focus on the advantages and disadvantages of each one. Accounting is a basic principle of economics and can be viewed on different levels. For example, a company will use accounting, but an individual may also use an accountant to take care of everyday needs. Many people use accounting for calculating their taxes, making decisions, and understanding their stocks and bonds. This literature review will continue to develop the differences between the business structures and provide an understanding of the main characteristics and the advantages and disadvantages of each of these structures. Sole Proprietorship A sole proprietorship is generally the organizational structure that someone takes who is just beginning a start-up company. This allows the individual to have a business name and use their own social security number or register with a business number. A sole proprietorship allows an individual to operate as a business and to take all the profits. One person runs the business and therefore is responsible for any losses or debts that the business incurs. Advantages of a Sole Proprietorship The literature review provides a variety of ways that a sole proprietorship has its advantages and relates to accounting. Amato (2013) states that sole proprietorships need to do succession planning although they are the only ones running the business. Amato states that sole proprietors must understand that there is a need for them to name someone who will take over the business when they want to leave it, if they are not selling it. Hendrix (2012) states that a sole proprietorship is the easiest form of business to start because the owner and the bu siness are the same entity. LaMance (2012) states several advantages of a sole proprietorship. The owner does not have to do separate business tax forms, sole proprietors can hire employees and they can receive tax breaks for hiring people. Also, the owner of the business is the only one responsible for making decisions in the business. Disadvantages of Sole Proprietorship LaMance (2012) states that there several disadvantages of sole proprietorsh