Creating, Financing, and Marketing a Business - Term Paper Example

The majority of businesses begin as sole proprietorships. These are owned by a single person who owns all the business assets and generated profits, as well as the liabilities and debts that the business incurs. It has several advantages: Easy and inexpensive to begin the owner is in full control and may make decisions on their own terms laws permitting, the owner receives all the income from business, the profits flow from the business to the tax returns of the owner and he can dissolve the business as he sees fit.

Its disadvantages are that the liability is unlimited, and capital is hard to rise. Corporations are state chartered and are separate from its owners. It can enter contractual agreements, be sued, and taxed. Corporations do not dissolve when there is a change of ownership. Its advantages are limited liabilities and ease to raise capital, while its disadvantages are that it is expensive to begin and its involving ongoing paperwork. Cooperatives, on the other hand, are autonomous associations, which involve people coming together for economic benefit.

It is democratically owned and controlled by the members and is an entity on its own legally. Its advantages are the ownership and control wielded by its members and limited liability, while its disadvantages are slow decision-making and conflict risk among the members. 2. Identify the pros and cons of the partnership as a form of ownership. A partnership is the sharing of one business by more than one person. The law does not distinguish the owners and the business, just like a sole proprietorship.

Its advantages are the sharing of risk among the partners and the sharing of business management duties. Its major disadvantages are the present risk of disagreement among partners and the shared decision-making (Groenewegen, 2009). 3. Discuss funding options for small businesses. There exist several ways in which businesses can be funded. They depend on what matters to the entrepreneur, the projection of further incomes, and the options available (Groenewegen, 2009). Businesses can be funded by: Debt financing, which involves obtaining a loan from a bank with which the entrepreneur is comfortable with Equity; involves attraction of investors, which while meaning a drop in profits coming to the entrepreneur, helps in expanding business.

Venture capital; involves the sale of business interest with a financing group rather than with personal investors. 4. Determine and discuss how managerial accounting can help managers with product costing, incremental analysis, and budgeting. Managerial accounting can help managers with product costing, incremental analysis, and budgeting. Managerial accounting refers to detailed data utilized by the company’s members (Russell, 2008). It includes turnover cost, employee benefits costs, shipping costs, and product costs among other numbers, which the company has available.

Human resources can utilize the data on benefits and turnover costs to make determinations on the budget and give increased wages to avoid turnover of employees. The store manager can utilize data on losses to check if customers or employees are thieving from him or her and add any necessary security. If a manager was in need to determine the suitability of a product’s price, they could check the data on sales to confirm whether supply and demand is near equilibrium and thus make necessary adjustments. 5. Discuss the basic components of the