Sole Proprietorship

Definition
A sole proprietorship is the simplest and most
common structure chosen to start a business.
 Definition
The sole proprietorship is the simplest business
form under which one can operate a business.
 Explanation
• It is a type of  business entity that is owned
and run by one individual or one legal person
(e.g. corporation, LLC)
• And in which there is no legal distinction
between the owner and the business.
 Explanation
• The owner receives all profits and has
unlimited responsibility for all losses and
debts.
• Every asset of the business is owned by the
proprietor and all debts of the business are
the proprietor's.
 Explanation
• It is a "sole" proprietorship in contrast
with partnerships (which have at least 2
owners).
• A sole proprietor may use a trade name or
business name other than his, her or its legal
name.
 Explanation
• The sole proprietorship is not a legal entity. It
simply refers to a person who owns the
business and is personally responsible for its
debts.
• A sole proprietorship can operate under the
name of its owner or it can do business under
a fictitious name, such as Nancy's Nail Salon.
 Explanation
• The sole proprietorship is a popular business
form due to its simplicity, ease of setup, and
nominal cost.
• A sole proprietor need only register his or her
name and secure local licenses, and the sole
proprietor is ready for business.
 Explanation
• The owner of a sole proprietorship typically
signs contracts in his or her own name,
because the sole proprietorship has no
separate identity under the law.
Advantages Of Sole Proprietorship
• you’re the boss
• you keep all the profits
• start-up costs are low
• You have maximum privacy
• Establishing and operating your business is simple
• it’s easy to change your legal structure later if
circumstances change
• you can easily wind up your business.
Advantages Of Sole Proprietorship
• A sole proprietor has complete control and
decision-making power over the business.
• Sale or transfer can take place at the
discretion of the sole proprietor.
• No corporate tax payments.
• Minimal legal costs to forming a sole
proprietorship.
 Disadvantages Of Sole Proprietorship

• you have unlimited liability for debts as there’s

no legal distinction between private and
business assets
• your capacity to raise capital is limited
• all the responsibility for making day-to-day
business decisions is yours
 Disadvantages Of Sole Proprietorship

• retaining high-caliber employees can be

difficult
• it can be hard to take holidays
• you’re taxed as a single person
• the life of the business is limited.
Examples Of Sole Proprietorship

Computer Repair
Services

Computer repair companies are often operated

as sole proprietorships. Some business owners
operate commercial shops, while others work
from home. Small computer repair businesses
typically cater to individuals.
 Examples Of Sole Proprietorship

Tutoring

Tutoring businesses provide learning

assistance to students in a variety of subjects.
Tutors may work with students in person or
through online video chats.
Examples Of Sole Proprietorship

Financial Planners
Sole proprietors work as financial planners,
offering their services to individuals and small
businesses. They help families plan for
retirement, save for college expenses and
invest in securities.