Benefits of Sole Proprietorship
Sole proprietorship is a very common kind of business that is operated and owned by one individual. Responsible for every business aspect, the sole manager also reaps all the profits without sharing with anyone. Further down are other benefits of sole proprietorship.
The main advantage of functioning as a sole manager is that the proprietor has total control over each business aspect. A sole owner can opt to sell their business to other people whenever he or she sees fit. Furthermore, the owner can also run the business and then pass it to heirs. Most sole proprietors usually appreciate the fact that they do not require answering to a superior as well as having to request for approval or permission prior to making business-related decisions.
2. Tax benefits
The sole proprietorship eliminates any business taxes like payroll taxes that should be paid by a manager. The taxes paid in sole proprietorship are the income taxes, similar to the ones paid by other citizens. Nevertheless, the sole owner is supposed to keep accurate records of the amount of money flowing in and out of their business for maximizing tax deductions.
3. Simple to start
Sole proprietorship is less expensive to begin and the owner is only supposed to comply with the local regulations, licensing requirements and zoning ordinances. There are less formalities and paperwork that should be followed, making the sole proprietorship easier to establish in contrast with a corporation.
The other key sole proprietorship benefit is that the owner does not require sharing the profit. Nevertheless, the sole owner is also responsible for maximizing the profit potential and making certain that the business is functioning at its best.
Sole proprietorship has some drawbacks also. The main one is that the personal property of the owner might be repossessed to cater for any debts held from the business.