What Is A Sole Proprietorship, And What Are Its Advantages And Disadvantages?
The sole proprietorship is the simplest and oldest form of business structure. It’s also the most prevalent form because it is easy to create, transfer ownership, or dissolve. Registration requirements depend upon the state that it is located in. The owner can also choose a fictitious name, which allows him to open business accounts at banks in that name. Identity The identity of a sole proprietorship and the business owner are one and the same which allows some definite advantages over more complex structures, such as, partnerships, and corporations. The operation of the business is centralized around, and controlled by the owner himself. This makes the decision making process simpler with less need for discussions. Taxation Profits from the company’s activities go directly to the owner, and are taxed on his own personal tax returns. The revenues are taxed at the owners own personal tax rate. This is a definite advantage compared to the double taxation that corporate profits receive.
