Owen Watt began his business, called Bright Spot, and it has been trading continuously ever since. Bright Spot is a sole proprietorship that sells lamps and light fittings to tradespeople as well as the general public. Since the 1980s a great deal has changed in the business environment including an increase in the number of businesses selling similar products. For quite some time, Owen has been thinking about expanding his business across Illawarra and even online, but his main issues are the required capital and “man power”, as he is the only one running his small business.
He has approached several banks such as the Commonwealth Bank of Australia and National Bank of Australia, to find out if he is able to borrow money for the expansion of his business and, unfortunately, he has been unsuccessful. One of Owen’s old-time friends, Jack Taylor, has suggested he make an appointment with a financial advisor. Jack said that the financial advisors would be able to help him in relation to the different types of entities that he could convert to and the opportunities he would obtain by different business models. Suppose you’re the chosen financial advisor, briefly explain to Owen the different types of profit-making business entities available to him to expand his business. In your comprehensive explanation, you are required to provide the following details:
1. The advantages and disadvantages of the different types of business entities.
2. For each type of business entity that you are referring to in your answer: you are required to make reference to at least three (3) different accounting procedures and practices that would be affected by the change in the type of business. You need to provide reasons as to why you think his accounting procedure and practices would be affected.