Enterprise Resource Planning (ERP)

What is Enterprise Resource Planning (ERP)?

Enterprise resource planning ERP for short, is a comprehensive software platform used to assist a company run more efficiently and effectively, by automating core procedures.

An ERP system can take orders from clients, handle financial records, update stock after every sale, and expect labor needs dependent on the amount of orders received. Besides handling processes, ERP systems also collect, store, and analyze information from internal purposes, such as marketing, production, accounting, facilities, and research and development.

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What an ERP System Does

ERP systems incorporate connect, many distinct modules which constitute the system. At the middle of this system is a giant shared database which all departments in the company can access and utilize. That database can provide information about:

  • Clients
  • Providers
  • Products
  • Orders
  • Shipments
  • Payments

The Biggest Advantage

While ERP systems are multifaceted and complex, their main advantage is that by connecting all elements of a business in 1 business management system, it’s quite efficient.

Picture the process involved in selling a product. A customer purchases a comforter from the bedding store. Your ERP system takes all the client’s information, in addition to their credit card details. It automatically checks to be sure the comforter is in stock and virtually sets it apart to be sent to the client.

The ERP System

The ERP system informs sending an order was placed and sends along the address to which it has to be mailed, in addition to a packing slip and a shipping label. As the order has been prepared for dispatch, a different region of the ERP system is reducing the stock by one, assessing projected earnings, and alerting production that more cloth has to be ordered to create more of these popular comforters to keep up with demand.

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Using the system automate the process of data sharing, the client’s name and address do not have to be repeatedly entered at each step of the sale.

Inventory doesn’t have to be checked and rechecked. And raw materials are arranged in just-in-time fashion to make sure that new comforters are being made at precisely the exact same pace as the finished ones are being sent out the door.

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A Corporate Tool

While ERP systems are essential today for many major corporations, they’re not typically seen in small and midsize companies. It is not that they could not help automate critical processes, simply that the cost is prohibitive for many smaller businesses.

Sole Proprietorship

What’s Sole Proprietorship?

A sole proprietorship is a company owned and run by a person. It’s not a legal entity but a description of a sort of company, so there are no formal papers to document to create one. With a sole proprietorship, the individual and company are one and the same.

Many entrepreneurs conduct new businesses as sole proprietorships since they’re established automatically when a person decides to start selling products or services. Independent graphic designers, snow plowing services, or private chefs all run only proprietorships if they’re the owners.

Although you don’t need to submit official paperwork to set up a sole proprietorship, depending upon your state, county, or town, you might need to have a business license or permit. Whether you’re required to obtain a license or permit will be dependent on the kind of business you run. You may check here to ascertain which sort of permit or permit you want.

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Using Your Real Name

Provided that you use your own personal name as your company name, you do not need to file any paperwork about that . However, if you would like to name your business something apart from your name, you might want to file papers to indicate you’re”Doing Business As…,” which is also called a DBA form. Many, but not all, states require DBA or”fictitious name” forms in that instance. Before your county or state courthouse will take your DBA filing, you will first have to check to confirm that nobody else is using that name; you can not use a name someone else has claimed.

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Taxes

Because you are your organization, any revenue you get from the company is deemed personal income, which you pay personal taxes on. Even though you won’t have extra business taxes, you may pay self-employment taxes and estimated taxes, based on what you earned the preceding quarter. Check with the IRS to understand how to monitor and pay those amounts.

Pros

The benefits of working as a sole proprietor are that you don’t have to do anything to set up your company. It automatically exists after you begin to sell something. You also don’t have another set of company tax forms to complete; a Schedule C and form 1040 are the IRS requires annually, in addition to the SE to your self-employment taxes. Without that excess taxation, sole proprietorships have the lowest tax rates. And because you’re the sole proprietor, you have total control over your company and how it’s run.

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Cons

On the flip side, the ease of operating a sole proprietorship can also be a responsibility. Because you are your company, if your business is sued, you’re personally responsible for any judgment. Such a reduction could be devastating to your fiscal wellbeing. Because your company is built around you, it’s also more difficult to raise money from shareholders or to secure a business loan; you might have the ability to qualify for a personal loan you could then use for business purposes but, once more, you’re personally liable if the business fails.

Sole proprietorships are simple and easy to make, but as your business grows, you might decide that establishing a limited liability company or Sub-chapter S corporation could provide more legal protection against lawsuits, if your company ever run into trouble.

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