Business Plan
Name
Institution

Executive Summary
Trusted Communications Limited is an Internet café company that will give customers an exclusive environment for communication and entertainment through the Internet medium. The objective of the company is to provide customers with a social, educational, and entertaining environment for worldwide communication. This is due to the increased demand for cost-effective access to information in an environment that is not socially, economically, or politically segregated. The company is seeking external financing to an amount of $25,000. The finances will assist in preparation and modification of the business site, purchasing the required equipment, and handling expenses during the first year of operation. The organization has already obtained funds from external investors in the amount of $38,000, $20,000 from the owner, and short-term loans in the amount of $9,290.

Business Plan
Trusted Communications Limited will be incorporated as a Limited Liability Company (LLC). An LLC is a flexible form of business that will provide many benefits to the investors. It will shield investors from matters of personal liability. The investors will not be personally liable for the business debts and liabilities. This means that they will be protected from using their personal assets to settle the company’s debts. They will also be protected from double taxation. The company will not be taxed as a separate entity. However, the company’s profits and losses will be “passed through” to each member of the company. Members of the firm will then report their profits or losses on their personal federal tax returns.
The LLC form will give Trusted Communications a flexible management structure. This is because the organizational structure will be decided by its members or managers. Thus, members will be more satisfied with the management of their business. There are few limitations on the type and number or owners that the company can have. There are no limitations on how profits will be shared. The company’s members will have the flexibility to decide on how to distribute the profits. Lastly, there will be less recordkeeping since there is less registration paperwork.
The company will create a unique environment that will be different from other local coffee shops and future Internet cafes. It will be a community center, where people can meet for socialization, entertainment, education, and information search on the Internet. The Internet services will be provided from a hot spot. In addition, customers will have an opportunity to enjoy great coffee and bakery items. The popularity of the Internet has grown exponentially. It has become necessary for both business and personal life. However, there are various risks that the business may face. They include decline in demand for services offered by the company, decline in the popularity of the Internet, and drop in the cost of home Internet. In addition, individuals may be reluctant to pay for the services the company offers.
General Staffing Plan
The company’s staff will consist of seven part-time workers, operating twenty eight hours a week at $5 per hour. Furthermore, the company will employ one full-time technician to handle minor repairs. The technician will be more technologically oriented and will work thirty five hours a week at a cost of $13 per hour. The three private investors will not take part in any management decisions. Thus, the company’s structure will provide simple, quick, and flexible communication and decision making. These characteristics will make it have few coordination challenges that are common in the larger organization chains (Chen, Yao & Kotha, 2009). As a result, Trusted Communications will react faster to market changes. Its comprehensive personnel plan is shown in the table below.

Staffing Plan Year 1 Year 2
Owner $23,220 $31,753
Part Time Worker 1 $7,280 $7,280
Part Time Worker 2 $7,280 $7,280
Part Time Worker 3 $7,280 $7,280
Part Time Worker 4 $7,280 $7,280
Part Time Worker 5 $7,280 $7,280
Part Time Worker 6 $7,280 $7,280
Part Time Worker 7 $7,280 $7,280
Technician $7,280 $7,280
Manager $18,000 $28,000
Total Staff 10 10
Total Payroll 92,180 110,753

The Company’s Chart of Accounts
Expected Resources

Start-up Funding
Start-Up Expenses $61,180
Start-up Funding to Cover Assets $27,0000
Total Funding Needed 88,180
Assets
Non-cash Assets $2,500
Cash Needed $25,000
Starting Date Cash Balance $25,000
Total Assets $27,000
Liabilities and Capital
Liabilities
Current Borrowing $9,180
Long-term Liabilities $25,000
Outstanding Bills $0
Total Liabilities $34,180
Capital
Planned Investment $54,450
Owner $20,000
Investor 1 $13,000
Investor 2 $13,000
Investor 3 $13,000
Total Planned Investment $54,450
Start-up Expenses $61,180
Total capital $6,730
Total Capital and Liabilities $27,000
Total Funding $88,180

Sources of Funding
This business plan is prepared so as to obtain external financing in the amount of $25,000. This financing is needed for preparing and modifying the business site, purchasing the required equipment, and covering expenses during the first year of operation. The financing that has already been obtained is as follows: $25,000 from the State Economic Development Fund, $20,000 from the owner, $39,000 from three investors, and $9,180 from short-term loans.
Sources of Revenue
The sources of revenue for Trust Communications are as follows: coffee sales, sale of specialty drinks, e-mail memberships, hourly Internet fees, and baked goods.
Analysis of whether or not the company will use Generally Acceptable Accounting Principles (GAAP) or International Financial Reporting Standards
Trusted Communications Limited will use Generally Acceptable Accounting Principles (GAAP). The first reason for using GAAP is because the International Financial Reporting Standards (IFRS) have not been fully implemented in the country. In addition, IRFS accounting methods are mostly important for multinational companies. Since the method is based on accounting principles, the performance of a company can be compared with companies from other countries. Trusted communications is not a multinational company and is not under pressure to implement the IRFS standards.
The GAAP/IRFS convergence will have an impact on the business. Adoption of IRFS will cause all the current LIFO reserves to become taxable income (Ampofo & Sellani, 2005). Thus, this will present a prohibitive cost barrier. Therefore, care will be taken if the company will migrate from GAAP to IRFS.
Pro Forma Balance Sheet and Income Statement
The projected pro forma balance sheet for the first year of operation is shown in table 1 below.

Pro Forma Balance Sheet Year 1 Year 2
Assets
Current Assets
Cash at Hand and Cash at Bank $27,706 $45,480
Current Stock and Inventory $7,050 $9,410
Total Current Assets $34,576 $54,890
Long-term Assets $0 $0
Total Long-term Assets $0 $0
Total Assets 34,756 $54,890
Liabilities and Capital
Current Liabilities
Borrowings $2,500 $4,900
Accounts Payable $14,861 $14,500
Total Current Liabilities $17,361 $19,400
Long-term Liabilities $13,300 $8,300
Total Liabilities $30,661 $27,700
Paid-in Capital $54,450 $54,450
Retained profits $61,180 $48,463
Net profit $25,567 $35,217
Net Capital $4,095 $27,190
Total Liabilities and Capital $34,756 $54,890
Company Net Worth $4,095 $27,190

The projected income from the business for the first two years of operation is indicated in the pro forma profit and loss account below.
Pro Forma Profit and Loss Year 1 Year 2
Sales $257,757 $314,264
Cost of Sales $61,106 $79,302
Gross Margin $196,651 $234,962
Percentage of the gross margin 76.29% 75%
Operating Expenses
Payroll $92,180 $110,713
Sales Promotion and marketing $32,640 $41,500
Insurance $5,900 $5,900
Rent $23,800 $23,800
Electricity, Water and other Utilities $9,010 $9,010
Total Expenses $163,530 $190,923
Profit Before Interest and Taxes $33,121 $44,039
Total taxes $5,340 $7,462
Interest Expense $2,214 $1,360
Net Profit $25,567 $35,217
Net Profit Per Sales 5% 5.71%

The pro forma balance sheet and the income statement shown above are based on the following assumptions. The interest rate for the two years will be maintained at 8%. The long-term interest rate will be maintained at 10%. Lastly, the tax rate will be maintained at 30%.
Internal Controls for the Company
The controls that will be implemented to protect the company’s assets and resources include preventive and detective controls and segregation of duties (Hightower, 2009). Preventive controls will prevent any unwanted activities in the company. Detective controls will be implemented to detect any undesirable activity. They will be both implemented together so as to control undesirable activities. Segregation of duties is an internal control that will be used in the accounting department. All the activities directly involved in the management of assets will be distributed among different employees of the company. There will be no single employee who will be responsible for initiating, approving, and recording transactions. Segregation of duties will reduce the risk of both fraudulent and erroneous activities.
Implementation of the Internal Controls in the Company
Preventive controls will be implemented in different ways. All employees will be required to follow proper authorization and documentation when performing their activities. This will ensure that every activity within the company is properly documented for reference. Moreover, preventive mechanisms will be implemented using physical control over the company’s assets. This means that access to the company’s resources will be restricted. Only authorized employees will be able to access certain company’s assets or resources. Detective controls will also be implemented in different ways. These mechanisms include physical inventory of the company’s assets, auditing, reviews, and analyses (Hightower, 2009).
Segregation of duties will be implemented by splitting a task into different parts, and then allocating each part to different employees. Implementation of these mechanisms will help the company safeguard its assets and protect personal data. This will assure investors and lenders that the company’s assets are safeguarded. In addition, customers will be confident that their personal information will be protected.
Impact of the Regulatory Environment
The regulatory environment includes the Sarbanes-Oxley Act, tax returns, and environmental regulations among others. The company will have to incur additional costs, which are directly attributed to the Sarbanes-Oxley Act. These costs will result from an increased expense for annual audits (Wintoki, 2007). Failure to implement the Act appropriately may cause legal problems to the company.
The regulation requires some of the company’s sensitive data to be exposed for accountability. In addition, integration of the standard accounting software may lead to security problems to the company’s data. Additional funds will be spent in an attempt to protect the company’s sensitive data. However, the regulation will increase the investor confidence. The company will ensure that all the accounting records are properly maintained for accountability and tax returns.

Conclusion
This paper has presented a business plan for Trusted Communications Limited. It will be used to seek funds from external sources to prepare and modify the business site, purchase the required equipment, and to handle expenses during the first year of operation. It has shown the form of the company and products and services to be offered. It has also shown the accounting principles to be used, sources of revenue, expected returns, and the impact of the regulatory environment.

References
Ampofo, A. A. & Sellani, R. J. (2005). Examining the differences between United States Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IRFS): Implications for the harmonization of accounting standards. Journal of Accounting, 29 (2), pp. 219-231. Retrieved from http://www.sciencedirect.com/science/article/pii/S015599820400081X [Accessed: 3rd Jan 2014].
Balouziyeh, J. M. B. (2014). Limited Liability Companies. A Legal Guide to United States Business Organizations, pp. 99-102.
Chen, X., Yao, X. & Kotha, S. (2009). Entrepreneur passion and preparedness in business plan presentations: A persuasion analysis of venture capitalists’ funding decisions. Academy of Management Journal, 52 (1), pp. 199–214.
Hightower, R. (2009). Internal controls policies and procedures. Hoboken, N.J.: Wiley.
Wintoki, M. B. (2007). Corporate boards and regulation: The effect of the Sarbanes-Oxley Act and the Exchange Listing Requirements on firm value. Journal of Corporate Finance, 13 (2), pp. 229–250.