Business Consulting Model

Business Consulting Model

Sole Proprietorship

Advantages

Its creation requires only registration with the Trade and Companies Register (RCS) or in the trades and no minimum capital is required (as a sole proprietorship does not own assets). The steps for the creation of a sole proprietorship are simplified and less expensive. It's the way that requires less paperwork in its constitution, not being forced to register in the commercial register (Nottonson, 2007).

Disadvantages

The entrepreneur is personally liable for debts incurred for the business, if it has some personal property; bankers will give him a loan more easily if it is limited to the capital of a corporation. From a social point of view, the individual entrepreneur shall be subject to the social workers' self-employed. In case of cessation of activity, it therefore cannot receive unemployment benefits. From a social point of view, the system of social protection of traders is less favorable than employees. In case of bankruptcy, individual entrepreneurs do not have unemployment insurance the general scheme (Bhide, 2000).

Partnership

Advantages

It limits the liability of shareholders to capital contribution to society. This business requires less formal rigor in your organization and lower minimum capital. It requires two to seven partners to form the partnership business. The partnership may allow the pooling of resources more developed. It can be a complementarily of skills, experiences (and the sales manager), but also greater financing capacity. Responsibility and therefore the risk are shared between the participants in the enterprise. Partners can help each other in the management of the company by a division of labor, especially in case of absence or illness (Nottonson, 2007).

Disadvantages

No shares can be transferred freely; the partner needs the consent of the other partners. In certain profit levels the tax rate of 30-35% can be a disadvantage compared to variable rate of income tax forms that are taxed. The partnership relationship requires a huge investment of time for its implementation and for the long term. Decision making is shared between the partners, where certain rigidity and the possibility of conflicts of interest, for example during the definition of the strategic directions of the business (investment, hiring). Profits will be divided between the partners.

Financial Statements

There are two basic financial statements used by most businesses. The balance sheet shows the assets, liabilities and equity. Each position in the balance sheet account is carried by the last day of the financial period. The income statement determines whether a net profit or net loss was achieved by comparing total revenue and expenses for a specific period. A third report is used by some companies. This is the ratio of equity which presents changes in equity during the year (Nottonson, 2007).

Consequences Associated with Forms of Business

Tax Implications

From a tax perspective, it will be subject to tax on income, BIC (business profits) or BNC (non-commercial profits) as appropriate. The partnership does not have a separate form for tax purposes. If the enterprise has suffered a loss, the partner can deduct losses of income from any other use they ...