Expanded Business Plan Outline

Note for Users: This project and its content were completed in 1997. At this time, there are no existing plans to update the materials.

1. Cover: Name, address, and phone number of the business. Hint: Give your plan a business-like appearance by typing it on high-quality paper and putting it in a vinyl or cardstock binder or a three-ring notebook. (SBA)

2. Title Page: Repeat the business name, address, and phone number, and add the names and addresses of the principal owners. Also show the date of issue of the plan and type "copy number___" so you can number and control copies. (SBA)

3. Executive Summary: A brief (one page) statement of the business plan objectives. Address the following questions and add additional information that will help you achieve your goals. Hint: You may choose to write this page last. (SBA)

Sole Proprietorship is usually the least costly way of starting a business. You find a location and open the door for business. There are the usual fees, like registering the business name. Attorneys' fees for starting a business will be less than for the other forms because they require less document preparation. One disadvantage of sole proprietorship is unlimited liability. All net income is taxable to the individual. The tax rate depends on individual income. The source of capital is usually limited to personal assets of the proprietor. All personal assets are available to creditors to satisfy claims against your business. Death and disability of the owner affect the existence of a sole proprietorship.

Simply making an oral agreement between two or more persons can form a partnership. However, this is not recommended. What is recommended is consulting an attorney to have a Partnership Agreement drawn up to help resolve future disputes. As in sole proprietorship, all net income is taxable to the individual according to each partner's share of ownership. The source of capital is usually limited to personal assets of the partners. All personal assets are on the line for business debts incurred by the partners themselves. Death dissolves a Partnership automatically. In the case of one partner's disability, the other partner(s) could probably fill in until the disabled partner recovers.

The Corporate form is usually the most costly to organize. An attorney should be consulted when incorporating even for small family corporations. A disadvantage of a Corporation is heavier taxes. Control depends on stock ownership. Control is exercised through regular Board of Directors meetings and annual stockholders meetings. A Corporation is taxed in one of two ways, as a straight Corporation or as a subchapter S Corporation. As a straight Corporation, profits are taxed at corporate rates. If you are eligible for subchapter S Corporation, they tax you in the same way as a Sole Proprietorship or Partnership for Federal tax purposes. Theoretically, a Corporation can sell stock to raise capital. However, there is little market for stock in small Corporations, except for friends or relatives. Technically, creditors of Corporations cannot reach personal assets for corporate debts. Small business corporate owners though, do not have limited liability. A Corporation is a separate legal entity and therefore the death or disability of shareholders does not affect existence. (VEM, pg. 23-26)

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Comments to: crs@uvm.edu Reviewed on xx/xx/97