Sole Proprietor – Advantages

• A sole proprietorship is easy to set up and has little formal paperwork.
• Starting this form of business can be as simple as promoting your new business by putting a sign-up announcing your new services or product.
• The business is easy to end.
• A sole proprietorship generally has fewer regulations.
• The business owner keeps all the profits and has the freedom to make all the decisions.
• Income is usually declared on the owner’s individual income tax return.

Sole Proprietor – Disadvantages

Unlimited liability (See Article ‘Limited and Unlimited Liability’ for more information).

• This means that the owner of a sole proprietorship is personally responsible for the obligations of the business, including the actions of any employee representing the business.
• The owner is 100% liable for business debts.
• Ownership of proprietorship may be difficult to transfer
• The business may have a limited life as, in most cases, the business dies or stops operating when the business owner does.
• It can be difficult to raise capital especially if the business has not been operating for long and has limited income to show.
• Most business funds come from personal savings or personal loans.

Note: The largest issue with a sole proprietorship is unlimited liability. (See Article ‘Limited and Unlimited Liability’ for more information).

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