Starting a business
Starting a business can seem like a scary idea for most especially when one is used to starting their job at 8 in the morning and clocking up at around 5 in the evening. With such a routine, life can seem stable and comfortable especially if one has a steady paycheck. But for those who feel predictability, ease, and comfort do not make them happy, they contemplate something more; starting their own business. Individuals start their own business because they want to be their own bosses and make more money. One wants to start something from scratch and see it develop into something meaningful for society.
If I were to start a business, it would be a service providing business entity because it would give me the freedom to leverage my experience and skills and also earn a profit. One requires less infrastructure, capital, and fixed costs to begin a service business. Service businesses allow an individual to hone their passions into an idea that is profitable and beneficial for others lacking. Everyone has their unique skills and knowledge that others can buy in the form of a service. The most apparent reason for starting a service business is because it allows one to be their own hero and boss and take control of their destiny. It also allows one to earn more money unlike working for someone else where one overworks themselves for destined salary.
The form of business ownership I would prefer for my business is a sole proprietorship. Since it is a start-up business providing only services, managing it under sole proprietorship will be of an advantage. A sole proprietorship is a form of business ownership that is a one-person organization. It is easy to start a business under sole proprietorship since it is simple, to begin with, and it does not need any legal formalities. An individual needs only to register their name and secure local licenses and they are ready to start. One of the main advantages of a sole proprietorship is that an individual has the full control of his or her business, and hence it is easy to make decisions, and also it brings greater satisfaction being one’s boss. With full ownership, a sole proprietor does not have to share profits with another person because he derives maximum incentive from the business and enjoys all the benefits.
Running a business as a sole proprietor also brings with it some disadvantages. For instance, a sole proprietor has unlimited liability, and this means that if the business is incapable of meeting its debts, the burden will lie on the business owner. Hence, if the company fails, it wipes out all the personal wealth of the owner, and it can impact negatively on their future business prospects. Another problem with a sole proprietorship is that the life cycle of the business depends on the owner; if he or she becomes incapacitated and is unable to continue, the company fails too.
The three asset account that I would like for my business will be; current assets such as cash, bank accounts, fixed assets such as machinery and furniture, and operating assets such as stocks and receivables.
The three liability accounts I would like for my business would be; Owner’s equity account, current liability account, and fixed liability account.
When I invest $50,000 into my new business venture, I will record it as an increase in the additional-paid-in-capital under the owner’s equity section.