Types of Businesses

Before starting any accounting problem, it's always a good idea to understand the type of business at question, and the environment in which it operates in.  Every business is unique, and has its own characteristics.  Some common question to ask yourself include:

• Is this business a sole proprietorship? corporation? partnership?
• Is the company public or private?
• What is the industry in which the business operates in?  Is it competitive?  
• Is the business selling goods or providing services?
• Is the company a retailer? wholesaler? manufacturer?
• Who are the primary customers?  
• What are the company's biggest assets?  Are they tangible?  Intangible?

It is important to be able to answer these questions because different types of companies can have different accounting implications.  For example, a large corporation that manufactures cars will have very different accounting than a sole-proprietor doing event planning.

I promise to write more about each of the points mentioned above.  Each question is a separate blog in itself!