Lil' Local Goodies: Case Study on Expanding a Small Retail

School: University Canada West - Course: ACCT 621 - Subject: Accounting

Lil' Local Goodies: Case Study Michael Joe V. Trogon (2023847) University Canada West Yasamin Alami, CPA ACCT620: Accounting For Managers November 23, 2021 @ 2359H

Executive Summary Sharice has a small retail business. The business has operated since 2020. The owner wants to expand the business and sell her product in the local farmer market on summer days for two weeks. She wondered if buying a new woodworking machine craft is a good investment, and she could get the finance from the bank with a 5.50% interest rate or from her friend with a 5% equity stake. As per my analysis, buying a new woodworking machine would not benefit the company because her crafts are not profitable in the last two years, which implies that a bank loan and investment from a friend are no longer required. The more sold items are from the product made by her friends and family, which I suggested to get more yield from them and sell it. And I also recommended staying as a Sole Proprietorship structure because the business income was not high and needed more time to be established. I will suggest it if the company earns $100,000.00 yearly, that is the perfect time to change the business structure from Individual to Corporation because the income tax rate is much cheaper with 11% than an individual.