What Is a Sole Proprietorship?

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Sole Proprietorship

Introduction

A sole proprietorship is a type of สล็อตเว็บใหญ่888เว็บเกมออนไลน์สล็อตที่รวมทุกเกม จากทุกค่ายเกมมาไว้ในที่เดียวคัดสรรทุกเกม ที่เป็นเกมสล็อตแตกบ่อย รวม เว็บ สล็อต ฝาก ถอน ไม่มี ขั้น ต่ำ เล่นได้ทุกเกม ทุกเกมแตกง่าย แตกใหญ่ บ่อยที่สุด เล่นผ่านมือถือได้ทุกที่ทุกเวลากับเกมสล็อตที่มีภาพสวย กราฟิกอลังการ ที่จะทำให้การเล่นของท่าน มีสีสันมากยิ่งขึ้น ตอบโจทย์ทุกความต้องการbusiness or organization that is owned, managed, and operated by one person. This individual is responsible for all risk and profits. This type of business is very popular and suitable for small businesses, at least during its first years. This type of business is typically a service like a hair salon, beauty parlour, or small retail shop.

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Definition of sole proprietorship:

  • This is a type of business that is managed, owned and controlled by one owner.
  • The term “sole” refers to “only”, while “proprietor”, refers to “owner”.
  • All profits are the property of the sole proprietor.
  • The sole proprietor assumes all risks.
  • The sole proprietor retains complete and unconditional control of the business.

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The Features of Sole Proprietorship

(1) Formation and Closure

  • This type of organization is created by the owner.
  • There are no legal requirements to form sole proprietorship forms of organizations.
  • Sometimes, legal formalities or certificates are required for the owner to operate the business.
  • The business owner has the right to close it at his discretion.

(2) Liability

  • The sole proprietorship business has unlimited liability.
  • The owner of the business is responsible for all liabilities. He will be responsible for all debts incurred by the business if he takes out a loan.
  • He is therefore personally responsible for any debt that can be recovered through his personal estate if funds are not sufficient.

(3) Sole risk bearer and profit recipient

  • The sole proprietor is the only one responsible for all risks associated with his business.
  • The sole owner is entitled to all profits and losses from the business.

(4) Control

  • All rights and responsibilities are owned by the sole proprietor, which is why he has complete control over all business activities.
  • A sole proprietor can’t have any influence on the business activities.
  • Only the sole owner can make changes to his plans.

(5) No Separate Entity

  • The accounting system considers the owner and business as separate entities.
  • However, the law doesn’t make any distinction between sole traders and their business.
  • The sole trader is therefore the only person responsible for all business activities.

(6) Lacking Business Continuity

  • The business may be affected by the death, imprisonment, or physical ailment of the sole proprietor.
  • The beneficiary, legal successor, or sole proprietor’s legal heir can manage the business for the owner.

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The advantages of sole proprietorship

Here are some of the key advantages of being a sole proprietor:

(1) Quick Decision Making

  • The sole proprietor has the right to make business decisions.
  • A sole trader can make quick decisions because he is the sole recipient of all profits.
  • Because he is the sole investor in the company, there is no need for him to share the profits.

(2) Confidentiality

  • The sole proprietor is able to make business decisions.
  • Because a sole owner has the sole decision-making power in the business, all business-related information is kept confidential.
  • A sole trader is therefore not required to disclose its accounts to the public.

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(3) Direct Incentive

  • Profit is the reward for taking on risk in your business.
  • The sole proprietor is the one who reaps all the rewards of the business.
  • Profits are a motivating factor for the sole proprietor to put more effort into achieving greater benefits and growth.

(4) A sense of accomplishment

  • Small successes in the business give the feeling of accomplishment and motivate the owner.
  • He feels satisfied when he makes a profit or reaps long-term benefits.

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The Limitations of a Sole Proprietorship

These are some of the main limitations of a sole proprietorship:

(1) Limited Resources

  • The sole proprietor’s resources are limited by his savings and borrowings from relatives.
  • Due to the poor financial situation of the company, banks may also refuse or deny long-term loans.
  • The growth of a sole proprietorship business is hindered by a lack of these resources
  • These are the reasons why businesses tend to remain small.

(2) The Life of a Business Concern

  • Because the owner and the business are one entity, there is no successor or heir to the business.
  • The business is closed when the proprietor dies, becomes insolvent, or becomes ill.

(3) Unlimited Liability

  • A sole proprietorship has the major disadvantage of unlimited liability.
  • The creditors can claim not only from the business assets, but also his personal estate if the sole owner fails to pay the debts due to the bankruptcy of a company.
  • It is risky to take out a large loan and it also puts the burden on the sole proprietor of the business.
  • Sole traders are not willing to take on the risk of the business’ survival or growth.

(4) Limited managerial ability

  • The sole proprietor must accept all responsibilities in order to run his business.
  • Sometimes, the owner must perform all managerial functions such as sales, marketing, buying, and dealing with clients.
  • He might not be able hire and keep aspiring employees.