Trigger 1

Problem: 
Steps of starting a business

Learning Objectives:
How to maintain finances?
Choosing a business format and pros and cons?
How to make a good business idea?
Why to become an entrepreneur?

Keywords:
Business idea
finance
Swot analyses 
Business plan
Start up
Motivation
Angel investor
Investment


How to maintain finances?
Bookkeeping. Credit card merchant account. Online payment services (Stephenson, J. 2018.)

Choosing a business format and pros and cons?

Sole proprietorship:
Headed by one person; pros, it’s the easiest to start up, no costs to create the business, and net business losses can be deducted from your personal taxes
Cons; you are personally liable for debts and other liabilities as the owner, and you pay personal income taxes on your business’s net profits

General partnership:
owned and operated by two or more individuals. In the general partnerships, all partners manage the business and assume responsibility for its debts.
Pros and cons are the same as in the sole proprietorship

Limited Partnership: (would suggest this for the case)
In limited partnerships there are two kinds of partners: those who own, operate, and assume liability for the business (general partners) and those that act only as investors (limited partners). Limited partners don’t have any control over business operations and have fewer liabilities.
Pros; easier to get investors, since they have limited liabilities. The limited partners can leave the business at anytime without dissolving the business partnership. The general partner get the money the need for the business, and also maintain the authority over business operations
Cons; the general partner is responsible for debts and liabilities by themselves. It’s more expensive to create, than general partnership.

Corporations:
Completely independent legal entity, that exists separately form the company’s owners. More regulations and tax laws, that they must comply with.
Pros; the owners’ responsibility for debts and liabilities are limited. Some benefits can be deducted as business expenses. When the owner and the business share profits, can the taxes be lowered.
Cons; more expensive to create than e.g. sole proprietorships and partnerships. Complicated legal paperwork must be filed. The business must separately pay taxes. 

S-Corporations
To avoid some of the drawbacks associated with operating a regular corporation, some business owners choose an S-Corporation business structure. With an S-corporation, company profits and losses are passed on to shareholders.
Pros; Owners’ responsibility for debts and other liabilities is limited. Owners share net profits or losses and report them on their personal income taxes
Cons; Like regular corporations, S-corporations can be more expensive to create than both sole proprietorships and partnerships. Ownership interest determines how much personal income is earned or lost from the business

Limited Liability Company:
A hybrid of some of the positive business features of partnership and corporations. Give owners liability protections without having to pay double taxes.
Pros; limited responsibility of debts and liabilities, even if they control the business. Profits and losses do not have to be allocated according to ownership interest. The owners can choose if the business is taxed as a partnership or a corporation.
Cons; it’s a more expensive business type than partnership and sole proprietorship. (Suess, E. 2017) 

How to make a good business idea?

Meet new people, keep a journal, tap into your interests, explore new ways of thinking, travel, go online, do your market research. (Djurkic, J. 2014)

Why to become an entrepreneur?

Your creativity doesn’t fit the corporate environment, you don’t want to be bound to 9 to 5, you are passionate about learning, you have unconventional ideas, you want to do things, you want to change the world for the better. (Toren, M. 2015)
You can control your destiny, you have the freedom to spend your time doing things important to you, unlimited earning possibilities, location independence, the chance to leave a legacy. (Constable, K. 2015)
Opportunity, autonomy, freedom, responsibility to society, impact, family, change, legacy, accomplishment and control. (Pozin, I. 2013)

sources:

Constable, K. 5.1.2015. 5 reasons you should consider becoming an entrepreneur. Entrepreneur. https://www.entrepreneur.com/article/241175 Accessed: 3.2.2018

Djurkic, J. 16.12.2014. 7 ways to generate business ideas this year. MaRS. https://www.marsdd.com/news-and-insights/seven-ways-to-generate-business-ideas/ Accessed: 3.2.2018

Pozin, I. 19.2.2013. 10 best reasons to be an entrepreneur. Inc. https://www.inc.com/ilya-pozin/10-best-reasons-to-be-entrepreneur.html Accessed: 3.2.2018
Stephenson, J. 2018. The basics of money management. Entrepreneur. https://www.entrepreneur.com/article/78994 Accessed: 3.2.2018
Suess, E. 10.3.2010. Pros and Cons of Each Business Entity Type (And How To Choose). Fundera. https://www.fundera.com/blog/business-entity Accessed: 3.2.2018 

Toren, M. 22.10.2015. 6 genuine reasons why people become entrepreneurs. Entrepreneur. https://www.entrepreneur.com/article/251838Accessed: 3.2.2018


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