To begin a new business, there must be an initial idea for a specific business plan. The business plan will provide the essential guidelines that explain what services or products that business would want to provide, the action behind the selection of that business for specific product, and the financial statements that define the connections of the organization.
With this small business idea, a business must take into consideration, which of the four forms of a business organization is the best fit for its product or service rather it legal, tax, accounting, and other implications. Opening a childcare facility requires specific legal consideration with the first being the selection of a suitable business entity. Childcare and daycare are similar but terms can be interchangeable. The IRS has special tax rules for home daycares but IRS declarations refer to expenses for childcare (“Starting a Child Care Business.”, 2013).
Small Business Service Many adults seek the best childcare when there is involvement in the workforce. Parents want to ensure their children are receiving the best in early childhood education as well as good nutritional diets to support a healthy start in their children’s lives. A business must consider the location, the times that most people are seeking childcare and what parents will be most comfortable feeding to their children to keep those children healthy and strong. This small business plan will focus on childcare for small children, their development in early childhood education, and the child’s nutritional needs.
This childcare facility will consist of directors who ensure that the facility maintenance is always top quality. The business will need to consider what it will need to focus on for executive and business decisions as well as developmental processes and food services. The first thing the business should consider is a name that is appealing to parents. This business will be beginning with the name of Beautiful Beginnings. The children are welcome to join from ages six weeks up until kindergarten. Staff must be proficient with communication with small children, be nurturing to infants and toddler ages of children and be able to maintain effective relationships with people.
Business Organization Formation Rationale The development of the business will focus on the pros and cons of the different forms of a business organization and the kinds of financial statements in affiliation with the formation of Beautiful Beginnings. The best type of business for their childcare facility is a sole proprietorship. This type of business is a form of business organization simple to set up and allows a single person control over the business, which is ideal for small owner-operated businesses (Kimmel, Weygandt, & Keiso, 2009, p. 4). Business owners have the most control with the sole proprietorship, which can be risky.
Sole proprietors can assign business income in any aspect they choose because there are no other partnerships. This type of business does not have to disconnect its personal funding from its business. This can mean if the childcare director chooses to use its on personal funds or take funding from the childcare facility to provide the children’s lunches, he or she may do so without consulting with other partners. This type of business can easily adapt with the vast changes in the business environment. The disadvantage is that this type of business will be solely responsible for any debts that it may obtain to remain out of financial trouble. Sole proprietorships generally receive favorable tax treatment (Kimmel, Weygandt, & Keiso, 2009, p. 4).
This kind of business focuses more on balance sheets and income statements, and the statement of cash flows. A partnership is an organization in operation by two or more individuals. This form of business is ideal for retail and service-type businesses (Kimmel, Weygandt, & Keiso, 2009, p. 4). Individuals in a partnerships only obtain a percent of the profits that the business generates and must share the responsibly of the debt it could create. Partnerships focus on balance sheets, income statements, and cash flows as well but do not provide stock as well as dividends. Partnerships generally receive favorable tax treatment (Kimmel, Weygandt, & Keiso, 2009, p. 4).
Corporations are separate legal entities in operation by stockholders (Kimmel, Weygandt, & Keiso, 2009, p. 4). Implications for all business organization types would succeed FASB and SOX rules in terms of accounting standards and reporting. What are the different types of financial statements associated with each business form?]
Beautiful Beginnings will provide a daily curriculum that will ensure that infants and toddlers are receiving consistent attention to help with the development of motor skills and each child is receiving the proper amount of attention until back in the care of the parent. The children ranging in toddler age until kindergarten age children will follow a curriculum that will allow these children to prepare for grade school. They will have healthy snacks and partake in arts and crafts, teaching of shapes, colors, and letters and also teaching them how to interact with other children and adults. Children will have recess to stay active and interact with the other children, while receiving proper rest periods until back into the care of their parent. This will be essential for their development in early childhood education as these are the most crucial years in a person’s life.
From the information and implications presented on each business organization type, Beautiful Beginnings would function best under the sole proprietorship and strategic purposes with just a one owner that would delegate tasks to staff and compensate them according to their job descriptions. There is potential that the business could run successful with a partnership. For the purpose of taxes, Beautiful Beginnings owner will need to file an individual tax return with Schedule C while also paying all self-employment taxes. Filing as a corporation will not be the most beneficial for a daycare facility.
Conclusion Beautiful Beginnings can become a very successful childcare facility because many people are in need to childcare and want the security of knowing his or her children will receive proper care and development in their early childhood. The owner will understand its accounting, balance sheets and income statements as well as the statement of cash flows. It is important for the owner to understand these because he or she will be responsible for the proceeds and well as any potential debt the business may obtain. The business plan that Beautiful Beginnings has is a promising one that can help to bring success to the owner while making children very happy and keeping parents at ease with their choice of childcare.