Sole proprietor Flashcards
Name
No legal requirements regarding the name of the business
Number of owners
Only one owner
Management
Can make quick decisions without consulting others
Capacity
Easy to control because its a small business
Legal Requirements
There are no legal and administrative formalities in the form of a sole proprietorship
Liability
The unlimited liability and the private property of the owner can be used to pay the business’s debts
Legal personality
A sole proprietorship is not a legal entity and agreements entered into by the owner into his/her personal capacity
Continuity
No continuity as the business is dependant on the owner
Capital
Personal debt and business debt is one and therefore capital should be carefully spent and managed
Profit-sharing
The profit of the company belonging to the owner as there is no distinction between the owner and the enterprise
Taxation
Depending on how much income is earned by the owner his/her tax rate will be lower than the corporate tax rate
Advantages of sole proprietor
Easy and cheap to establish
Quick decision making
Owner receive all the profit
Disadvantages of sole proprietor
Unlimited liability
Capital is limited
No job security
