-Longevity of the organization: No formal documentation is needed to form a sole proprietorship, only a local business license. Because the owner assumes all responsibility of all business interactions it is very difficult to find another individual that can take such risk by inheriting the business. It is because of this that most businesses formed as a sole proprietorship will cease with the death of the owner. -Control: One of the advantages of having a sole proprietorship is that the sole owner has sole control. All business matters and decisions are up to the owner.
The owner has the ability to grow or contact its operation at will with no need to consult with a boss or board of directors most sole proprietorships operate on a small scale, the main factor that distinguishes a sole proprietorship is the sole responsibility of ownership and decisions. DISCUSSION OF THE KEY CHARACTERISTICS 1.LIABILITY: There are no limits on liability with a sole proprietorship, the owner is responsible for all the businesses debts and obligations. The earning power of a sole proprietor can be limited due to lack of capital. The sole proprietor is only able to obtain personal credit to expand the company, the bank will not treat the company as its own entity 2.Income taxes:Income earned by the sole proprietorship is income earned by its owner and is taxed as such 3.Longevity: the sole proprietorship has a limited lifespan once the owner dies or moves on from the sole proprietorship will cease to exist 4.Sole proprietors have complete control over the decision making process. 5.The profits of the company do not have to be shared with anyone, the downside is the liability and loss are also not shared with anyone else.
The owner has an increased level of control, they have the rite to change the business whenever they feel like it and have the advantage of not having to call shareholder meetings. One of the largest advantages is the allocation of profits. Unlike larger companies sole proprietorships don't need to distribute profit amongst it's shareholders. All profit goes directly to the owner, who does with it as he or she sees fit. Because of the owner's status as a sole trader, she does not need to publish her accounts.
A sole proprietorship is a business that has a single owner who is responsible for making decisions for the company. A partnership consists of two people who share the responsibility of running a company. A corporation is one of the most obvious business structures and has different identities from the owners of the company. One or more owners may contribute as shareholders of a corporation. Sole: A sole proprietorship is the easiest entity to form because it is not a legal entity and requires no paperwork.
They offer independence, and the ability to ‘be your own Boss.’ Of course there is the fact that as the owner all the profits belong to you. Taxes are combined so there is no separate filing and there are tax advantages to filing as a business rather than an individual. That brings us to the disadvantages of Sole Proprietorships. Some disadvantages to being a sole proprietor is often resources are limited. Because there aren’t any real differentiating factors between the business and its owner often credit is based on the owner of the business.
Sole Proprietorship: This a type of organizational form “where there is no legal distinction between the business and its owner”. ( ) Are easy to start, as well as relocate. There is complete autonomy over every aspect of the business and 100% of the profit is retained by the owner and only taxed once. Although there is often a high tax rate on the profit and the capitol needed to start or grow the business can only come from the sole owner or their personal means of credit. Because the business and the owner are legally the same entity there is unlimited liability to the owner to honor all contracts.
Sole Proprietorship Is the most common business type, where the business is operated and owned by a single individual. In this type of business, the sole proprietor provides capital, does not share profit or loss and runs the business alone. As such, the business and the owner are indistinguishable for tax and legal purposes (Dlabay, 2011). To differentiate this business from other business types, a sole proprietorship is discussed under the following characteristics. i.
As a Sole trader the owner himself is responsible for every action made and also keeps all of the profit. This could be a newsagent's shop, for example. Individuals, who provide a specialist service like hairdressers, plumbers or photographers, are also sole traders. Sole traders do not have a separate legal existence. As a result, the owners are personally liable for the firm's debts, and may have to pay them out of their own pocket.
This is the perfect way to start my business and earn a profit because I will not be paying rent or taxes on an office space in a building. I will be the only employee in my business, running it as a sole proprietor. Eventually, as my business grows, I could hire a secretary or an assistant if I got more clients than I could handle on my own. At my bookkeeping business I will offer services for keeping track of finances for small, locally owned businesses that do not want to keep track of loss and profits on their own. I will also offer help with income taxes and filing for individuals seeking guidance.
A sole proprietorship is a business owned by one person. This is the simplest type of business to start and is the least regulated form of organization. A sole priprietor performs most of the major tasks and functions such as overall manager, sales manager, and finance manager. The owner not only retains the revenue and title to all of the business’s assets, such as profits, but is also responsible for all losses, debts, and aliabilites incurred. Although a sole proprietorship must comply with all required licenses and permits necessary for its type of business to operate legally, there is no legal requirment to start the business operation.