Essay: Starting a New Business

Sample Essay

The first step necessary to start the business is to identify the nature and size of business. There are three main types of business organizations which include sole proprietorship, partnership and corporations which are dependent on number of owners and pattern of ownership. Each of these businesses has its advantages and disadvantages. When small businesses are initially set up they are usually started in the form of sole proprietorships when there is only one owner but if there are more than one owner then this business takes the form of a partnership.

Ideally, the peanut butter sandwich shop business should be started as a sole proprietorship but as there are five people involved the business it should be started as a partnership. There are various advantages of partnerships as compare to sole proprietorship and corporations which include easy formation, low cost of business, lower taxes than corporations, lesser regulations, risk sharing, fewer legal formalities and resource sharing (Brigham & Ehrhardt, 2001). A corporation could also be setup but due to small size of business and the relevant disadvantages of corporations for small businesses this form of organization is ruled out.

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