The Importance of Sole Proprietorship
Sole proprietorship is a business form recognized in almost every jurisdiction throughout the world. While many different corporate forms have their advantages and disadvantages, the sole proprietorship remains an important and vital way to do business. This is primarily due to the ease of access associated with this particular form of business.
Other People Are Reading
-
Identity
-
By definition, a sole proprietorship shares the legal identity of the proprietor. This allows the owner to build brand identity and name recognition at the same time.
Simplicity
-
Because the proprietor is the business, the paperwork associated with opening and operating the business is minimal. If the sole proprietor is doing business in his own name, there may be no paperwork at all required to open the business. Similarly, the sole proprietor files no corporate tax return or other corporate tax filings.
-
Low Cost
-
Because there is no paperwork and very few, if any, filings, the cost is extremely low. Therefore, people trying to start their business with very little money still have access to forming a business and getting the doors open. Thousands of dollars may be saved in legal fees alone.
Flexibility
-
Many small business owners provide a variety of sometimes unrelated services to make ends meet. All of these can be accounted for under the auspices of one sole proprietorship. The business owner need not create a new corporate entity for every service or type of product she offers.
Warnings
-
While useful, the sole proprietorship offers none of the protection afforded by other corporate forms. If the business is sued, the personal assets of the sole proprietor are at risk. Also, raising money can be difficult or impossible without a corporate form in place to issue shares or units to the investor.
-
