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Advantages And Disadvantages of Sole Proprietorship


Advantages And Disadvantages of Sole Proprietorship are listed below. So let us check it out some information on advantages and disadvantages to know more about sole proprietorship

Advantages of Sole Proprietorship :

  1. Sole proprietorship is a kind of business in which all the important decision for the company are taken by a single owner while is partnership two or more partners takes a decision , So in Sole proprietorship you can have a direct control on decision making for a business over partnership.
  2. In Sole proprietorship generally separate set of different accounting records does not required for acccounting of business and personal assets.
  3. Sole proprietorship is one of the easiest, less expensive and frequently preferred business while in corporation complex legal formalities for filing and setup is required for a business.
  4. In Sole proprietorship  you can use your current bank account in the name of sole proprietorship firm and sometiems your can also use your personal  bank account to start your business.
  5. Sole proprietorship is free from  double taxation, they are not required to pay an income tax twice.
  6. In Sole proprietorship the number of employees is not fixed, you can run a business with as low as single employee or no employee for a business.
  7. In Sole proprietorship a single person can manage operations of a company while  if entrepreneurship is owned by more than one person then managing operations sometimes becomes difficult.
  8. If you are a sole proprietor of your company then you can do a full time job in your own company.
  9. Both Sole proprietorship and franchise are most popular and successful methods to start a business.
  10. In Sole proprietorship  you can pay your health insurance directly from your pocket, hence you can write it off on your taxex.
  11. In Sole proprietorship an individual is the only owner of the company or a business hence you can receive hundred percent profit in your company.
  12. As Sole proprietorship has only one owner, all liabilities belongs to that person, He has full uninterrupted control over all types of business operations of a company. Unlimited liability.
  13. As the business and the revenue grows the  Sole proprietorship can be converted into private limited company.
  14. In a Sole proprietorship a sole proprietor can raise capital by taking loans to run a business.
  15. A Sole proprietor need not have to pay an unemployement tax.
  16. Workers compensation is not required by a sole proprietor.

Disadvantages of Sole Proprietorship :

  1. Sometimes in Sole proprietorship it becomes very difficult to get or qualify for bank loans to start your business.
  2. During sole proprietorship If you face a divorse then distribution of assets and to differentiate the business entity and  the personal assets becomes difficult.
  3. Sometimes Your spouse could potentially make a claim of the shares of the business in sole proprietorship.
  4. After the death of the sole proprietor: The sole proprietorship exist as long as the owner of the company is alive. If the owner passes the sole proprietorship to another person then the business continuous.
  5. If both husband and wife after marriage runs a business then they are not consider as sole proprietorship , they now be considered as partnership.
  6. Sole proprietor are required to pay sales tax on products and varioius taxable services offered by them.


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