Selecting a Legal Structure Selecting an appropriate legal structure of business is essential to establish a new business for entrepreneurs. Decision making on the type of business will affect tax, legal, and accounting issues during business operations. According to Kimmel, Weygandt, and Kieso (2009) business structures include sole proprietorships, partnerships, and corporations. The purpose of this paper is to review the advantages, disadvantages, tax implications, legal implications, and accounting implications of each type of business to decide an optimal structure for a new small business proposal, named “The Green Korean Cuisine”.
Sole Proprietorship
“A sole proprietorship is an unincorporated business owned by one individual (Anderson, Pope, Kramer, Flowler, Joseph, Hulse, Luna, & Schadewald, 2012, p.2-2).” Sole proprietorship is easy to establish new businesses with relatively modest amount of money and the control and management are centralized to a sole owner. As a sole proprietorship, the Government grants certain tax advantages such as no tax consequences when contributing or withdrawing money and/or property to the business (Anderson et al., 2012). Anderson et al. (2012) indicated that a sole proprietorship is not a separate entity for a tax and legal implications. Owner’s income or loss and assets report on his individual tax returns. Thus preparing tax return forms for own business taxes are simpler and easier. However, the sole proprietorship allows unlimited liability to the owner and his business actions (“Choice of Business Entities”, 2001). All debts and obligations are signed by the sole owner and are more at financial risk. In financial statement, income tax expense or income tax payable will not reported because a sole proprietorship does not pay income taxes (Phillips, Libby, R. & Libby P.A., 2011). Owner’s salary is not considered as an expense in a sole proprietorship, it is accounted as a distribution of profits because employer/employee contractual relationship does not exist in the structure (Phillips, Libby, R. & Libby P.A., 2011). The Sarbanes-Oxley Act (SOX) only applies to larger businesses such as corporations.
Partnership
A business owned two or more persons reaching mutual agreement about relationship is a partnership (Phillips, Libby, R. & Libby P.A., 2011). According to Kimmel, Weygandt, and Kieso (2009), partnerships are formed when an individual does not have enough economic resources or unique skills. Unlike a sole proprietorship, the profits, losses, debts, and liabilities are shared among the partners. A partnership is also simple to establish and provide a shared control (Kimmel, Weygandt, & Kieso, 2009). Anderson et al. (2012) stated that a tax advantage for partnerships is only taxed at a partner level and not individually taxed to each partner. Otherwise, a partner should pay the full self-employment taxes because the partner is not considered as an employee (Anderson et al., 2012). In balance sheet, dividends are not indicated because partnership does not provide stock to shareholders.
Corporations
Another form of business organization is the corporation. It is easier to transfer ownership, raise funds, and offers no personal liabilities (Kimmel, Weygandt, & Kieso, 2009). Corporations include two types: C corporations and S corporations (Anderson et al., 2012). C corporations and S corporations are taxed differently. C corporations are taxed at corporate level then taxed again at the share holder level. S corporations are taxed once much like a partnership and taxed only at the share holder level (Anderson et al., 2012). Balance sheet, Income statement, statement of cash flows, and retained earnings statement are all important for corporations. Creditors are paid first before shareholders. It is vital to review balance sheet and retained earnings statement by shareholders to decide whether to reinvest or not. Retained earnings statement shows what part of profits are paid to shareholders as dividends. Balance sheet indicates amount of liabilities paid to creditors. Corporations are subject to the SOX and Financial Accounting Standard Board (FASB). This is to prevent financial frauds and reduce unethical corporate behavior (Kimmel, Weygandt, & Kieso, 2009).
“The Green Side Galore”
Korean cuisine is well-known as a healthy food. In 2010, South Korea’s obesity rate came in at 3.5 percent and the obesity rate of the United States was 34.4 percent (“Easy Korean Food”, 2010). Healthy foods, one of the consumer trend, is receiving more attention due to general health benefits; lower risk for cardiovascular diseases and certain type of cancers, Stronger liver and the kidneys, stronger bones, and healthier skin (“Easy Korean Food”. 2010). This current trend causes a high rate of demand for healthier eateries. Also increased number of growing Korean communities in West coast has shown a demand for their most favored style of foods that is not common in the United States. In these current circumstances, it is a good opportunity to open an online healthy side dish delivery store, named “The Green Korean Cuisine”.
The Green Korean Cuisine will use only natural ingredients, such as sea salt, homemade soy sauce, bean sauce, and red paper paste. To gain consumer’s trust, artificial additives would be avoided. Detailed information regarding total calories, origin of ingredients, and nutritional benefits will be provided in the website. To be in compliance with health standards for foods, The Green Side will acquire Hazard Analysis Critical Control Point (HACCP) certification. According to “U.S. Food and Drug Administration” (2011), “HAACP is a management system in which food safety is addressed through the analysis and control of biological, chemical, and physical hazards from raw material production, procurement and handling, to manufacturing, distribution and consumption of the finished product” (HACCP). To emphasize stronger business ideology of healthy foods, products packaging will consist of recyclable materials and natural color would mainly used. The optimal business structure for “The Green Korean Cuisine” will be the partnership. One of partner will be in charge of management and accounting and another partner will be a skillful and experienced chef. That way ~~~
Also partnership allows shared liabilities so not only one owner responsible for every debts and obligations. Tax ~~~~

References
Kimmel, P.D., Weygandt, J.J., & Kieso, D.E. (2009). Accounting: Tool for business decison making (3rd ed.). Retrieved from https://ecampus.phoenix.edu/content/eBookLibrary2/content/DownloadList.aspx?assetMe taId=4e8d9ad7-a401-403f-9d0e-98a6d7ee0f21&assetDataId=c27faf18-fda8-45ec-91df-b76db1269c78 Anderson, K. E., Pope, T. R., Kramer, J. L., Flowler, A.C., Joseph R.J. Hulse D.S., Luna, L., & Schadewald, M. S.(2012). Prentice Hall's Federal Taxation 2012. Corporations, Partnerships, Estates & Trusts. Retrieved from