Sole proprietorship is the kind of business wherein the structure of it being is operated and owned by a certain person. It doesn’t include the multifaceted filing requirements which are often associated with some categories of business structures like corporations. It also lets a person get help in reporting his or her business expenses and income that is included in his or her tax returns. This is also very attractive and interesting for most individuals who own small investors to the reason that it is a helpful way to start a certain business. Aside from that, they are also permitted in the entire profit which is often collected by sole proprietorship.
Actually, this is also a risky choice because there are not official separation for both the business and its owner. This only means that the owner will still be liable for any debts or loses that the sole proprietorship sustained. It is also possible that he or she will be lawfully responsible for the violations committed by his or her employees and the business itself. Below are the advantages and disadvantages of sole proprietorship.
The Advantages Of Sole Proprietorship
- Tax Benefits – If you are a businessman, you will never be required to file for a separation business tax report. As a substitute, you will just list your business information and show the individual tax return.
- Gain Information Easily – When you start to enter in a sole proprietorship, you will never have issues or difficulties in building your business. There are times that it is formed with no double taxation standards which are appropriate to utilize in improving your business marketing.
- Decision Making – It often controls the entire business decision which depends on the hands of the owner.
- Employment – Sole proprietorship is a big opportunity for most unemployed workers. This often hires lots of people who are in need of a job that provides lots of opportunities.
The Disadvantages Of Sole Proprietorship
- Limited Continuity – Business doesn’t have any continuation when the owner becomes incapacitated or deceased. When the owner die, his or her business will be shut down and this will be included in his or her personal assets.
- Liability – You will be detained straightly in the responsibilities like violations, losses, and debts in your business.
- Complexity in Raising Capital – When it comes to raising capital, you will surely encounter complexity on it. This often happens when your funds are often supplied by the owner. Sole proprietorship is not a problem about generating money or stock just like what often do in most corporations.
- Taxes – Even there are tax benefits provided by sole proprietorship, you will still be required to pay your self-employment taxes. And, there are also some tax benefits today that are not deductible like the health insurances which are intended for your employees.
Through the information that contains advantages and disadvantages of sole proprietorship, you can decide if you will grab sole proprietorship or not. If you want to in building your business, you must prepare yourself for the possible issues that may come on your way.
