1.1 Definition of Sole Proprietorship
Sole proprietorships are the easiest kind of businesses to explore in quest for a career. Sole proprietor is the only one owns the business, so when thinking of establish a business, entrepreneur should consider this famous and easy format as their option. Sole proprietors exists everywhere, we can visit and listen about the joys and frustrations of being a sole proprietor from them.
1.2 Advantages of Sole Proprietorships
-Ease of establish and operate a business.
Starting a business for sole proprietorship is much easier compare to starting a Partnership or Corporation format of business. All entrepreneurs have to do to start a sole proprietorship is buy or lease the simple or needed equipment and announces themselves are in a business.
-Retention of company profit.
The owner of the company will not only gain the profits earned but also benefit from the increasing value as the business growth.
The sole proprietor is not required to fill a separate business tax report. All the profits of a sole proprietorship are taxed as the personal income of the owner. Owner have to pay the self-employment, and they have to estimate their taxes to the government and suffer penalties for nonpayment.
-Being your own boss.
Working for yourself is better than working for others, this is the way of sole proprietor feel. You may make mistake by operating a business, but lesson learnt from every mistake you made.
1.3 Disadvantages of Sole Proprietorships
As a sole proprietor, you are responsible for all liabilities or damages incurred by the business. You must pay them, even if it means to sell your properties, home, car or whatever else you own because there is not separation between business and the owner.
-Limited life span.
The business will be closed down immediately once the owner of the sole proprietorship has deceased or withdraw from the business.
-Limited financial resources.
The available of the funds to the business are limited by the amount the personal resources of the sole proprietor. However, partnerships and corporations have a better probability of obtaining the financial backing needed to run a business.
-Limited growth of business.
Since the sole proprietorships rely on its owner for its business know-how, funding and creativity, expansion definitely will be slow.
Based on the advantages and disadvantages of sole proprietorships above, I would like to recommend sole proprietorship as the structural of owning a business. It is because Sole proprietorship is the easiest way to start up because it has no form to file and no partner to consult.