Bookkeeping All-in-One For Dummies, 2nd Edition

Chapter 3

Exploring Business Structures

IN THIS CHAPTER

Looking at sole proprietorships

Taking a look at partnerships

Checking out limited liability companies

Comparing different types of corporations

Seeing what happens when a company decides to go public

All businesses need to prepare key financial statements, but some businesses can prepare less-formal statements than others. The way a business is legally organized greatly affects the way it reports its financials to the public and the depth of that reporting.

For a small business, financial reporting is needed only to monitor the success or failure of operations. But as the business grows, and as more outsiders — such as investors and creditors — become involved, financial reporting becomes more formalized until the company reaches the point at which audited financial statements are required.

Each business structure also follows a different set of rules about what financial information the business must file with state, local, ...