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 impacts 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, ...