advantage or merits of Sole proprietor ship business.
Answers
Explanation:
Sole proprietorships have several advantages over other business entities. They are easy to form, and the owners enjoy sole control of the business profits. However, they also have disadvantages, the biggest of which being that the owner is personally liable for all business losses and liabilities.
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Merits of Sole Proprietorship Business:-
Easy to Form
If you open your doors and start doing business, you just created a sole proprietorship. It's not necessary to file any papers with federal and state governments to register a sole proprietorship. However, depending on local regulations, you may need to obtain a business license or a certificate of occupancy. If you operate the business in a name other than your own, you may need to register the name of your company as a DBA (doing business as) name.
Less Paperwork Required
Unlike corporations and partnerships, sole proprietors are not required to file any articles of incorporation, exhibits or annual reports when they start businesses. You do not have to pay legal fees to a lawyer to get your business started. The operations of the business are private and not subject to public disclosure because a sole proprietorship does not file any registration documents or annual reports with federal or state governments.
Owner Has Complete Control
The owner controls everything that goes on in the business and does not have to seek the approval of a board of directors, stockholders or anyone else. The owner does all the hiring and firing and makes all the decisions. However, an owner should consider whether being the sole decision-maker would be a burden. If that is the case, a partnership might be a better business structure choice.
Sole proprietorships have only one owner, but they are allowed to have employees. A sole proprietor owner who decides to close the business can sell all the assets and turn out the lights. Getting permission from other people is unnecessary.
All Income Goes to Owner
Sole proprietors keep all the profits of the business to themselves. They do not have to share the income with other stockholders or investors as they would with other types of business structure, such as an LLC.
Tax Filings Are Simple
All the income of the business is taxed on the owner's personal tax return. The company is not taxed as a separate entity. In general, the only tax form needed is Schedule C, which is filed with the IRS along with the owner's tax return.