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Starting a business is an important decision, which cannot be done without extensive research. Some people may be tempted to make hasty decisions about starting a company once they get a promising startup idea; however, there are many steps that have to be taken to initiate a company in the United States. For instance, states have different procedures for registering a business and obtaining a license. Moreover, some cities and counties might offer significant benefits to new businesses, such as tax exemptions. This essay aims to discuss the procedure of starting a business in Jonesboro, Arkansas, and the various forms of business available to entrepreneurs.
Starting a New Business in Jonesboro, AR
Arkansas has a relatively simple structure for beginning business people to follow. There are many useful government resources that provide information and advice to those looking to start a business. For instance, Dream It Do It Arkansas offers a service that can provide an entrepreneur with a checklist of requirements and actions to be completed to start a new business in a specific city in Arkansas. First of all, it is crucial for an entrepreneur to prepare a detailed business plan and to obtain the financing necessary to open a new business.
There are several state grants that are available to new business owners in Arkansas, such as the Arkansas Early Childhood Commission Grant, which offers financial help to child care service companies, and the Arkansas Economic Development Commission Division of Science and Technology Grant, which could be obtained by companies working to promote innovation and technological advancement.
However, it is more common for beginning business owners in Arkansas to obtain a Small Business Loan, issued by the U.S. Small Business Administration. Next, it is essential to check that the business complies with the state and county requirements for operating in the desired business sector and to submit the required documents to the Craighead County Clerk. After these steps are completed, it is necessary to register the new business with the Arkansas Secretary of State using online registration forms (Dream It Do It Arkansas).
Depending on the business type and business sector, it may be needed to obtain professional permits from local departments, such as occupational permits, building permits, business licenses, and tax permits (“Arkansas Business Resource”). Tax identifications and permits, including income tax withholding, seller’s permit, and unemployment insurance tax, can be obtained from the Arkansas Department of Finance and Administration (“Arkansas Business Resource”). Finally, applying for a Federal Employer ID Number, or EIN, is the next necessary step. This can be done via the U.S. Internal Revenue Service (Dream It Do It Arkansas).
Forms of Business
There are five main forms of business entities, and each one has its advantages and disadvantages. Firstly, a sole proprietorship is the simplest form of business in which a company is operated and owned by a single person. The main benefits of a sole proprietorship are that the owner receives all the profits generated by the business and that it is easy to set up (Richards). The main drawback, however, is that the owner is fully liable for all losses and debts of the company; moreover, the size of such a company is limited as the capital can only be obtained from personal funds or small loans (Richards). A partnership is a sole proprietorship with more than one owner.
The owners can contribute their funds, thus allowing the business to grow, and can manage the company more effectively than a single person. However, the partners will still be liable for the company’s debts and losses (Richards). Moreover, partnerships can be unstable if there are any conflicts between the owners. A limited liability company (LLC) has several owners who are not liable for debts or losses of the company.
The limited liability is the main advantage of LLC, followed by taxation schemes that equal those of sole proprietorships and partnerships (Richards). However, one significant limitation of an LLC is that it is hard to change it into a PLC or other publicly traded business, which can restrict its growth (Richards). A corporation is a form of business that is mostly used by large companies, where the ownership is distributed among a number of stockholders. One primary advantage of a corporation is that it can grow and develop both nationally and internationally; furthermore, the shareholders of a corporation do not hold any liability for its debts (Richards).
However, the taxation of corporations is high, which affects the potential profits, making this form of business unsuitable for new entities (Richards). Finally, an S corporation is a small corporation with a restricted number of shareholders. A major benefit of an S corporation is that it does not face double taxation as corporations do, and thus the shareholders can obtain more profit. Nevertheless, given the limited number of shareholders, the inflow of capital into the company is smaller than in corporations, which affects its potential for growth.
The specific business that was considered as part of this assignment is a local shop in Jonesboro, Arkansas. The owners of the store were interviewed to obtain more in-depth information about the business. First of all, the company was established in 2006 as a sole proprietorship but transformed into a partnership after the first owner had passed, and his two children inherited the shop. Besides the owners, there are two sales employees who are responsible for checking out customers and maintaining the store in good condition.
The two employees work on a shift schedule. One of the owners performs operational functions, such as budget planning and financial reporting, whereas the second owner is responsible for managing employees and suppliers. Together, the owners review business plans, marketing initiatives, the range of products, and more.
Generally, the shop functions well and is used by the majority of people in the neighborhood. The store is always clean and has all the necessities. The owners receive a moderate amount of profits. However, there are certain opportunities that can be used to increase sales and develop the business further. For example, as the store is located close to an interstate highway, it would benefit from offering different car travel essentials, such as phone chargers, pillows, etc. Secondly, since the shop is located away from other buildings and the owners are in possession of the nearby land, they could use the additional space to increase the store area, thus allowing for stocking a wider range of products.
Overall, opening a small business in Jonesboro, Arkansas, is fairly easy, and there are no significant limitations that could affect new enterprises. The procedures for opening a new business are clearly stated on the state’s website; it is also possible to obtain a small business loan, which makes the process easier. As seen from the example, there are plenty of opportunities for small businesses to grow and develop. However, setting up an LLC, a corporation, or an s corporation may prove to be more challenging due to the limitations of these business types.
“Arkansas Business Resource.” Small Business Advice, 2012. Web.
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Dream It Do It Arkansas. The Arkansas Secretary of State, 2017. Web.
Richards, Leigh. “The Advantages and Disadvantages of the Different Types of Business Entities.” Chron Small Business, n.d. Web.