Small-Business Idea Paper There are plenty of ideas for a possible small business, but one must look past just the idea or hopes of opening a small business and think about the legal, tax, accounting, and other items that need to be addressed in establishing a small business. One of the first things to consider is, as what type of entity the company will be chartered or established, and what rules apply for the state in which the company is located. For the purposes of this paper, the potential small business owner will use the State of Colorado as the state in which the company will be headquartered and Colorado Springs as the city. The business that will be established is a high end pawnbroker in the north end of Colorado Springs. In establishing a business in Colorado Springs, Colorado, one must look at the local, state and federal ordinances and laws in establishing a business. The business owner must also decide on how the company will be registered in Colorado such as Sole proprietorship, Partnership, C corporation, S corporation, or an LLC – Limited Liability Company. This paper will show the advantages and disadvantage of each of these entities as it relates to a pawnbroker business, while also examining the different types of financial statements associated with each business entity and consequences such as tax, accounting, and legal implications. The final section of the paper will explain the reasoning behind the start up of a pawnbroker store, the classification chosen and why this choice was made for this new business.
Sole Proprietorship This type of structure is established if the business is owned and operated by a single person. If the person is running the business other that his or her first and full last names they must register as a trade name or DBA (Doing Business As). This is the most common form of legal structure according to the State