Comprehensive Statement Analysis
Business organizations come in different forms, and although they all have financial gains and losses, not all have the same rules and regulations that need to be complied with when preparing financial statements.
The Advantages and Disadvantages of the Different Forms of Business Organization
Sole proprietorship is a business organization that is owned by one individual. The advantages to a sole proprietorship is that all profits go to the business-owner and that the owner has full control of the business (Kimmel, Weygandt, & Kieso, 2011). There are also some disadvantages in a sole proprietorship-such as the owner is personally liable for all debts and obligations of the business. Another disadvantage is that the business and the owner are not separate beings (Cheeseman, 2013).
A business organization that is owned by two or more individuals is a partnership. The advantages to a having a business partnership are that there is more capital put into the business and that the obligations and debts are shared among each partner. Individuals who are part of a partnership can also deduct their losses through their personal income tax. There are a few disadvantages to being part of a partnership are that all profits are shared and that all decisions need to be made by each partner (Cheeseman, 2013).
A C Corporation is any corporation that is taxed separately from its owners. Corporations are a “separate legal entity (or legal person) for most purposes" (Cheeseman, 2013, p. 594). The advantages of a corporation are that it can have more than 75 shareholders that allow for growth of the business, and the business does not dissolve due to the death of the owner. The disadvantage to having a corporation is that there is double taxation, and this means that the business is taxed as well as the shareholders.
A small domestic corporation is known as an S Corporation. legal treatment as a corporation, but tax treatment as a partnership—that is, no double taxation” (Kimmel, Weygandt, & Kieso, 2011, p.573). Another advantage of an S corporation is that the shareholders are not responsible for paying off the debt of the corporation. The disadvantage to having an S corporation is that the business is limited to no more than 75 shareholders (Kimmel, Weygandt, & Kieso, 2011).
Financial Statements Required by Law
In a sole proprietorship, the financial statement required by law is a balance sheet. They need to prepare a permanent owners capital account. The balance sheet will show the owners’ equity and the owners’ name, capital. “A sole proprietor prepares an owner’s equity statement rather than a retained earnings statement and uses different titles for the equity items shown on the balance sheet” (Kimmel, Weygandt, & Kieso, 2011, p. I-3). The NPR (National Research Program) has indicated that Sole Proprietors are the largest contributors to the tax gap; this means they misreport their earnings. They also have a greater dollar amount of missing taxes. (Nelson, 2008).
In a partnership each partner’s initial investment is “recorded at the Fair Value of the Assets at the date of their transfer to the partnership” (Kimmel, Weygandt, & Kieso, 2011, p. H-5). The financial statements include an income statement that contains a division of net income and a balance sheet. A partnership also has an owners’ equity statement that is known as the partners’ capital statement. The partners’ capital statement is used to explain the fluctuations of each partners' capital account and a full partnership capital during the year (Kimmel, Weygandt, & Kieso, 2011).
A C corporation has stricter state and federal laws to abide by. Once a corporation is registered it must obtain permits and licenses. A corporation is owned by stockholders and therefore the company itself is taxed on their profits and again when the shareholders receive their share dividends. The corporation must report their profits and revenue annually (Cheeseman, 2013). The financial statement used in a corporation is a balance sheet the reports the stockholders’ equity with paid-in capital on common stocks (Kimmel, Weygandt, & Kieso, 2011).
Similar to a Corporation, an S Corporation has to fill out legal forms that all shareholders must sign in order to allow the State to grant the company the Corporation title. An S Corporation advantage is that it “allows for In an S Corporation the profits, revenues and losses are submitted through stockholders and owners personal taxes. The financial statements that are required are similar to those of a corporation that includes balance sheets and stockholders' equity (Kimmel, Weygandt, & Kieso, 2011).
Consequences Associated with each form of Business Organization
The tax implications for a sole proprietorship has to do with the money the owner earns for the business that is the owner's income. The owner will have to claim the profits and losses through their personal tax returns. The legal implications are that the owner is legally liable for all debts and damages for the business. For the accounting implications, the owner is responsible for filing self-employment taxes and submitting quarterly tax reports. The owner must organize a personal income tax Form 1040 and report their profits and losses on Schedule C (Cheeseman, 2013).
The legal and tax implications for a partnership come from the UPA. The legal implication is that all partners are liable for debts and damages of the business. Partnerships do not pay federal taxes and are claimed on each partner’s personal income taxes. Partnerships must comply with the SOX Act of 2002 in regards to financial reports (Sarbanes-Oxley Act, 2006).
In a corporation, the legal implications and tax implications have to do with shareholders being the owners of the corporation. The shareholders elect the board of directors and vote on important changes in the corporation (Cheeseman, 2013). A corporation is a separate legal entity and is double taxed. The owners can be held civilly and criminally responsible for damages. The Sarbanes-Oxley Act warrants that the corporation complies with preparing and reporting of the financial statements.
An S Corporation for legal and tax purposes must file forms with the IRS, and each shareholder must sign the form. For tax purposes, the S corporation is formed in order to avoid double taxation. The legal implications are that the company is liable for all debts and violations. Accounting implications for an S corporation is that they must keep proper records of the profits, losses, investment of cash and property in order to establish each shareholder proportion of ownership in the corporation (Cheeseman, 2013).
Unique Product My Small Business Provides
The product and service my business provide has to do with healthy living. Clean eating and natural products are a key to staying healthy and living well. The products come from a company that I get a warehouse deals and sell at a resale cost.
The business form I would utilize is that of sole proprietorship. Few legal forms need to be filed and for tax implications, I will report my profits and losses through my personal income tax. Should the business take a loss, I will be responsible for the debt and any damages. Another form of rationale I utilized to pick this form of organization is that I would like to have full control of the decisions, profits and earnings in the business.
Conclusion
Business organizations have forms of financial statements in order to provide the IRS, State and Federal governments their profits and losses. Some businesses require less startup cost, while others require investments and shareholders.

References
Cheeseman, H. (2013). Business Law (8th ed.). Upper Saddle River, NJ: Prentice Hall.
Kimmel, P., Weygandt, J., & Kieso, D. (2011). Accounting: Tools for Decision Business Making (4th ed.). Hoboken, NJ: Wiley & Sons.
Nelson, S. C. (2008). Tax Policy and Sole Proprietorships: A Closer Look. National Tax Journal, 3(LXI), 421-443.
Sarbanes-Oxley Act. (2006). The Sarbanes-Oxley Act. Retrieved from http://www.soxlaw.com/