Morris & Morris Financial Consultants
29th January, 2014
Greetings Mr John Public,
After careful evaluation and assessment of your business plan, we at Morris & Morris have enclosed in this letter three (3) forms of business organizations viewed most suitable to your Pet Shop business endeavour. The advantages and disadvantages of each business form were also included to further aid you in decision.
Business organizations are as follows:
1. Single or Sole proprietorship consists of one individual doing business. Therefore, this type of organization refers to a business owned by a single individual who is solely responsible for all activities within that business.
* Ease of establishment and dissolution of business. Establishing a sole proprietorship can be as simple as announcing business and likewise, quite easy to dissolve.
* Sole proprietors are typically subjected to fewer regulations
* Owner derives all profits from business
* There is virtually no corporate income tax as income is treated as personal earnings and declared on owner’s individual tax return.
* Unlimited liability. Owners who organize their business as a sole proprietorship are personally responsible for the obligations of the business.
* Raising capital may prove to be difficult as personal funding and loans may have to be obtained.
* There is limited life within this business. If owner passes the business will dissolve as a result.
2. Partnership is an organization where two or more individuals are the owners, having expressly and implicitly agreed to establish and run a business for profit. This sort of organization may operate from a Limited or Unlimited standpoint.
* Easy formation
* Division of risk: “…the entire burden in case of loss does not fall on any single individual but gets divided among partners of the business.”
* More credit...