Briefly describe the merits of sole proprietorship!! Give thnx=Take Thnx❣ Follow=Follow Back!!xD❣
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.
In this form of business ownership, an individual proprietor owns the business, manages the business, and is responsible for all of the business’ transactions and financial liabilities. This means that any debts incurred must be paid by the owner.
Advantages of Sole Proprietorship
This form of business has several advantages such as :-
1 - Lower Start-up Costs
Limited capital is a reality for many start-ups and small businesses. The costs of setting up and operating a corporation involves higher set-up fees and special forms.
2 - Ease of Money Handling
Handling money for the business is easier than other legal business structures. No payroll set-up is required to pay yourself. To make it even easier, set up a separate bank account to keep your business funds separate.
3 - Government Regulation
Sole proprietorships also have the least government rules and regulations affecting it. They do need to comply with licensing requirements within the states in which they do business and they do need to pay attention to local regulations. However, the paperwork required is much less than large corporations. Thus, they can operate quite easily. Sole proprietorships also do not pay corporate taxes.
4 - Sale and Inheritance
The sole proprietor can own the business for as long as he or she decides, and can cash in and sell the business when they decide to get out. The sole proprietor can even pass the business down to their heir, a common practice.