Small_Business_Idea_Paper

GPS Sports Business Idea Kimberly Bellamy Accounting - ACCO/561 October 29, 2012 Professor Deborah Adkins GPS Sports Business Idea GOD’s Power Shown through Sports, which is called GPS Sports, is a technology-based business that offers a broad variety of sports products. The organization has developed a system to convert the sports industry in analyzing, tracking, and receiving sports information in real time. GPS Sports collects all sorts of applicable information and materials that will aid the company in building conclusions that examine the continuation, growth, and gateway into new markets. The differentness of electronics is mixture of apprehending and documenting Certified Statistical Data, medical operations, GPS tracking methods, and gaming layouts with educational elements. For example, statistics track the information and give results in real-time with the execution for instantaneous inquiry. These details can be secured and exchanged with any web base device. The medical application will communicate with coaches and trainers to guide the prevention of dehydration or injury. This life saving product is made up of a jersey or shirt with internal probes that monitor the heart and hydration rates. The gaming concept is focused on children ages seven to thirteen and allows users to upload information and save it in a personal library. The data can be used in collaboration with gaming organizations and allow users to gain points from their previous players. There are educational components to assist with reading levels and skills. The company continually conducts environmental scanning to maintain close views on external and internal actions. This helps in examining and determining the data to be informed on the disadvantages and benefits of the company ("GPS Sports", 2011). Business Forms, Advantages and Disadvantages The government has available funding to assist GPS Sports in developing the organization. GPS must first identify the specific form of business selection that will best suit the company for the products and services. There are four general form of business, which are Sole Proprietorship, Partnership, Limited Liability Corporation, and Corporations (Fay, 2008). Sole proprietorships are run by an individual with no partners, committees, or boards to report to. Advantages of this business form are a low start-up cost, owner in direct control of decision making, profits to owner, tax benefits, and minimal working capital required. Some disadvantages are the liability is unlimited, difficulty in raising capital, and lack of continuity in business in company in the absence of the owner. Partnerships are two or more individuals unite for develop an organization or generate a shared profit. The advantages for partnerships are relatively low start-up cost, limited regulation, broader management base, and additional sources of investment capital. Disadvantages consist of the business partner are jointly and individually liable for action of other partners, profits must be shared with others, unlimited liability, and decision have to be consulted with partners (Anderson, 2004).  Limited Liability Corporations, known as LLC, is a corporate entity and recognized by the state that governs the company. Collective individuals can make up an LLC but are referred to as members. The main advantage of an LLC is the limited liability that means each member or shareholder is only responsible up to the amount the individual invested. Another comfort of a business to operate as an LLC is that it can pass taxation; meaning the LLC bypasses double taxation. Though this may sound as the best business practice, LLC’s has disadvantages, including restricted ownership transfers. Some administrations make it difficult in how shares are transferred. This results to investors refraining from LLC. The continuation of a LLC can be terminated with the withdrawal of one member. Corporations are total legal entities within the sight of the law. Unlike LLC’s corporations purchase and sell property, pay their own taxes, and create their own income. An individual who incorporates has no personal financial, tax or, legal connections to the corporation. Corporations belong to the shareholders, control by the board of directors, and operated by the officers. One of the biggest advantages of a corporation is the shareholders is not personally responsible for company debts, obligations or liabilities. Corporations can raise capital by issuing stock. Disadvantages are the procedures and paperwork associated. Corporations must hold at least on meeting annually and record detailed minutes. Another disadvantage is the double taxation that the company must comply to. The dual tax occurs when the company files with the IRS and when dividends are issued (Anderson, 2004).  Financial Statements and Consequences The main objective for GPS Sports is to make a sufficient profit. The financial statements of a company disclose how well the goals and objectives are accomplished. It is essential in a sole proprietorship to must build enough profit to pay the salary of the owner and still have funds left to support business growth. The income statement has two valuable metrics for profit in a sole proprietorship, which is gross profit and net profit after the salary of the owner. A balance sheet is needed to inform the owner of how much liquidity he or she has within the business and gives the relationship between debt and owners’ equity. Partnerships should scope performance and report to the users of the financial information such as management and investors. The income statement is developed in partnerships to analyze and examine revenue generated during a given accounting period as well as costs incurred in generating these revenues. A retained earnings statement is necessary to display how net earnings are handled; it shows the amounts withdrawn by each partner. The financial position of the partnership is shown in a balance sheet for a particular timeframe. This statement indicates assets in possession of the partnership and claims on the assets. The cash flow statement demonstrates the sources of funds and how the partnership applied the funding (Kimmel, 2012).  . GPS Selection of Business GPS Sports has selected to practice business as a Limited Liability Corporation. The LLC will assist in protecting the assets of the owners by not making them personally responsible for debts and liabilities of the company. It will also allow GPS to pass through taxation because the loss or income of the company can be passed through to the owners and reported on their individual taxes. Other reasons the LLC was selected as the best practice for GPS Sports are the limited compliance requirements, with fewer state imposed annual requirements, heightened credibility, lesser restrictions, and a flexible structure for management. The only major disadvantage is the possible ongoing expenses in which a small business loan may have to be considered (Blakenburg, Plesch, & Wilkinson, 2010). Conclusion Entrepreneurs must weigh the pros and cons of business formation for their organization. The form a company selects is dependent on several factors, which are tax related, others business detailed, and legal responsibilities. One of the main things that GPS has taken in consideration, along with the other factors, is how to handle losses and profits within the business. Understanding the characteristics of the four principal business ownership structures and how they affect operations is essential to ensure viability and prosperity. References Anderson, B. L. (2004, Spring). Benefit Issues Regarding Partnerships, S Corporations, and Sole Proprietorships. Journal of Pension Benefits: Issues in Administration, 11(3), Retrieved from http://EBSCOhost. Blakenburg, S., Plesch, D., & Wilkinson, F. (2010, September). Limited Liability and the Modern Corporation in Theory and in Practice. Cambridge Journal of Economics, 34(5), . EBSCOhost. Fay, J. R. (2008, August). What form of ownership is best'. CPA Journal, 68(8), 46. EBSCOhost. GPS Sports. (n.d.). Retrieved from http://gpssports.net/ Kimmel, (2012). Accounting (3rd ed.). Retrieved from University of Phoenix eBook Collection database.