What is a sole proprietorship?

A sole proprietorship is a type of business structure where an individual is solely responsible for the company's assets and liabilities. It is the simplest form of business ownership where the business is owned and operated by a single person.

Advantages of operating as a sole proprietor

• Easy to set up: Sole proprietorships are easy and inexpensive to establish.
• Full control: The owner has complete control over decision-making and operations.
• Profit retention: The owner keeps all profits generated by the business.
• Tax benefits: Business profits are taxed as personal income, potentially resulting in lower taxes.

Disadvantages of operating as a sole proprietor

• Unlimited liability: The owner is personally liable for all business debts and obligations.
• Limited resources: Sole proprietors may have limited access to capital compared to larger corporations.
• Lack of continuity: The business is closely tied to the owner, making it challenging to transfer or sell the business.
• Longer hours: As the sole owner, the individual may have to work long hours to keep the business running.