Scenario 7-1.
Kelli is starting her new business in the mall in the coming weeks. She has finished her business plan and is now looking at planning her startup. Her business consists of a clothing store for young women who purchase medium-quality fashionable school and work clothes. She sees customer service as her strong point because she is currently in the same age group and is very clothes conscious herself. Her competitors, also located in the mall, are all older women who cater to older women who purchase fashion-conscious clothes. Kelli has no business experience, yet is willing to invest her entire inheritance in her new business venture. She is single, 21, and has no current debts. She has an opportunity to rent a space in the local mall if she signs the agreement next week. Kelli is excited about being able to pick the clothes on her racks herself and then sell those clothes to young women who would look fashionable in them.
-In Scenario 7-1 above, which of the following legal forms of businesses should Kelli choose if she wants to use the IRS Form 1040 C for income tax reporting?

Question

Scenario 7-1. 
Kelli is starting her new business in the mall in the coming weeks. She has finished her business plan and is now looking at planning her startup. Her business consists of a clothing store for young women who purchase medium-quality fashionable school and work clothes. She sees customer service as her strong point because she is currently in the same age group and is very clothes conscious herself. Her competitors, also located in the mall, are all older women who cater to older women who purchase fashion-conscious clothes. Kelli has no business experience, yet is willing to invest her entire inheritance in her new business venture. She is single, 21, and has no current debts. She has an opportunity to rent a space in the local mall if she signs the agreement next week. Kelli is excited about being able to pick the clothes on her racks herself and then sell those clothes to young women who would look fashionable in them.
-In Scenario 7-1 above, which of the following legal forms of businesses should Kelli choose if she wants to use the IRS Form 1040 C for income tax reporting?

Quizplus · Accepted Answer

The IRS Form 1040 C is specifically for reporting income from a sole proprietorship. As Kelli has no business experience and is investing her own inheritance, a sole proprietorship would be the simplest and most suitable legal form of business for her. Additionally, as the sole owner of the business, Kelli would have full control over the selection and sale of clothes, which aligns with her vision for the business.

Scenario 7-1. Kelli Is Starting Her New Business in the Mall in the Mall