In the business field, sole proprietorship can be defined as one of the simplest ways to easily operate your chosen business field. If you are a neophyte in the field of sole proprietorship, it is very important that you have an apparent and superior understanding on how you will manage and operate your business. Just any kind of business ventures, there are advantages and disadvantages that are associated with sole proprietorship. Here, you will learn and know some of the pros and cons of sole proprietorship.
The Pros of Sole Proprietorship
- The main advantage that you will experience with sole proprietorship is that it is very simple to manage and operate. In order for you to legally operate your chosen business, all you have to do is to register with DBA to obtain business license.
- According to studies, sole proprietorship is considered as the simplest type of business structure to maintain. When you are engaged with sole proprietorship, you are not required to prepare financial statements, accounting books, filing reports and attending annual meetings. These paper works will let you feel frustrated and stress and this is one of the reasons why most of the business owners today choose sole proprietorship.
- When you are reporting your annual taxes, sole proprietorship makes the process easy and less hassle. If you are engage with sole proprietorship, all you have to do is to keep all the valuable information about your business expenses and income report.
The Cons of Sole Proprietorship
- It is a fact that sole proprietorship is quite easier than other business structures. However, sole proprietorship will also let you experience serious drawbacks. The main drawback that you will encounter with sole proprietorship is that you are the one who is liable especially when your business encounter some debt issues.
- If you operate your business under sole proprietorship and unfortunately you encounter financial trouble, your creditors have the right to come after your savings and personal property.
- Before selecting sole proprietorship, it is very important to know your personal liability as well as the risk that is associated with sole proprietorship.
- In the field of sole proprietorship, you are required to sign several contracts in your own name since you don’t have separate identity. Sole proprietorship doesn’t have the ability to get business credit, business loans or even raise your capital.
How do you feel about Sole Proprietorship
Sole proprietorship can be a great choice of business structure especially if you are just a beginner in the business field. However, you need to make sure that when you decided to engage with sole proprietorship, you are ready to face business troubles and debts. As long as you full understand all the terms and conditions that are associated with sole proprietorship, nothing to worry about. How about you what can you say about sole proprietorship?