Sole Proprietorships

The vast majority of small businesses start out as sole proprietorships. These firms are owned by one person, usually the individual, who has day-to-day responsibility for running the business. A sole proprietor enjoys a number of advantages. First and foremost, it is the easiest and least expensive form of ownership to organize. Sole proprietors are in complete control, within the law, over all decisions. They receive all income generated by the business to keep or reinvest. The business is easy to dissolve, if desired. This form of business organisations is the most flexible and adaptable to changing times because of their ability to restructure themselves and react more quickly and successfully to changes than large corporations. Sole proprietorships do not have to pay special taxes placed on corporations. On the less bright side, however, is the fact that a sole proprietor has unlimited liability. He assumes "complete personal" responsibility for all of his business’s liabilities or debts because, in the eyes of the law, he and his business are one and the same. Besides, it is very difficult for a sole-proprietor to raise investment funds and to attract high-calibre employees from among those who are motivated by the opportunity to own a part of the business.