Getting Started - Legal Structure
Pros and Cons of Sole Proprietorship

Home

Return to
Legal Structure

Pros and Cons of Sole Proprietorship

Advantages

You are in business

Easy to form
There are hardly any restrictions and very few forms to fill out. You need only file with your local city or county clerkís office.

Control of profits
As a sole proprietor, you control all of the money made by the business.

Control of decision making
You make all business operation calls.

Flexibility
You are management and, thus, can respond more quickly to day-to-day changes and decisions.

Freedom from bureaucracy
You experience less government control and taxation.

Simpler Taxes
You donít have to do a separate tax return for the business and, particularly, you donít have to prepare a balance sheet for the business.


Disadvantages

Unlimited liability
As a sole proprietor, you are responsible for 100 percent of all business debts and obligations. This liability covers all of the proprietorís assets, including his or her house and car. Additional insurance coverage may be needed to cover personal injury or physical loss that may hamper the continuity of the business.

Fragile business existence
The death, physical impairment, or mental incapacitation of the owner can result in the termination of the business.

Difficulty raising capital and financing
It is typically more difficult for sole proprietors to raise operating cash or arrange long-term financing because they have fewer assets.

One view, one way of doing business
All the decision-making power rests with one individual.

Less professional appearance
A sole proprietorship appears less professional than a partnership, and certainly less so than a corporation.

* Source Streetwise Small Business Start-Up

Site Index

  Home Page

  Accounting

  Advertising

  Associations

  Books

  Business Directories

  Business Opportunities

  Business Planning

  Careers

  Consulting

  Entrepreneur

  Finance

  Letters & Forms

  Getting Started

  Hiring & Firing

  Home Business

  Internet  New!

  Legal

  Managing a Business

  Managing People

  Marketing

  Office

  Presentations

  Sales

  Selling a Business

  Taxes

  Time Management

  Travel & Maps

  TurnAround  New!

  Valuing a Business

   

 


Overview      Business Ideas      Business Plan      Legal Structure      Getting Financing
Copyright ©2001-2003 BusinessTown.com, LLC.     Disclaimer
Contact us for technical support or provide us feedback.
BusinessTown.com LLC - Privacy Statement

BusinessTown.com is a registered trademark of BusinessTown.com, LLC.