Reasons to register a Sole Proprietorship

You are on this page because you are interested in registering your new business as a Sole Proprietorship. Just to go over some items you should be aware of, here is a small list of pros & cons of a Sole Proprietorship.

Advantages of a Sole Proprietorship:

1. One OwnerBeing a Sole Proprietor, has one big advantage in that they are solely responsible for all gains and losses. A Sole Proprietor has all the decision making power of the entire business. They do not have to report to a shareholder or board of directors about the running of the business.
2. Tax RegulationsA Sole Proprietor does not have to pay any kind of corporate taxes or pay business tax. A sole proprietor will only have to pay the Sole Proprietorship tax which is his income tax which is based on their personal annual income.
3. Less PaperworkA Sole Proprietor needs to maintain the paperwork which they need to run the business.
4. Owner Controlled Time LimitFor a Sole Proprietorship there is no time limit for any kind of business activity. Even though, there are a few restrictions which has to be done in time to meet their customers’ needs, there are no particular schedules issued inside the organization to finish it on time. The Sole Proprietor is the only person responsible in fixing the time limit.
5. Owner Controlled Hiring ProcessFor a Sole Proprietorship the hiring process entirely depends on the owner.
6. Less Formal Laws ApplyA Sole Proprietor does not have any need to face the kind of laws and regulations a corporation does.
7. Not Answerable To Any Given Person Or Government AgencyA Sole Proprietor is entirely responsible for the business profit or losses.
8. Low In Cost A Sole Proprietor has no predefined way of running their business. The entire work setup does not necessarily require a large investment and also the spending of money depends solely on the owner.
9. Easy Formation A Sole Proprietorship is not complicated and can be formed easily with less restrictions and requirements.
10. Direct MotivationIt is the entrepreneur or Sole Proprietor who owns all the risk. During times of profit the complete profit goes to the owner’s pocket. The Proprietor is thus motivated to dedicate himself completely so that they earn more profit.
11. Secrecy The Proprietor takes responsibility for each and every aspect of the business and hence business secrets are maintained by them. There are also no legal requirements which require him to publish their accounts and thus secrecy is maintained and competitors are not provided with a chance to know any detail about their business.

Disadvantages of a Sole Proprietorship:

1. Completely Responsible For All LossesA Sole Proprietorship may have both profit and losses over time. A Sole Proprietor may have difficulties when facing a loss. A Sole Proprietor is completely responsible for any kind of misgivings in the business, be it a loss or closing any particular division, a Sole Proprietor has to come face to face with these situations.
2. Stress A Sole Proprietor who makes all of the decisions single handedly in a business may be stressed by that responsibility. Sometimes this might also cause mental stress when every single thing of the business will be dependent on the Proprietor’s decision.
3. Few Regulations For a Sole Proprietorship where there are no required rules or regulations there are chances of being laid-back in practicing your own guidelines. As such the business might not operate in a completely efficient manner.
4. Investor ConfidenceGetting funds investors may be difficult as there is no assurance for the investor until the Sole Proprietorship has been running successfully for a period of time.
5. No Tax Exemptions A Sole Proprietorship does not come under corporate regulations or any business regulations.
6. No Work Life Balance A Sole Proprietor has all the responsibilities. A Sole Proprietor might have to work 24/7 to run their business successfully.
7. Liability For debts and losses that occur in the Sole Proprietorship, the owner is the only person responsible. It is the responsibility of the business owner to repay the debt from personal funds.
8. Lack Of Continuity When the owner is incapacitated or deceased then there is a lack of continuity in their  Sole Proprietorship. If the owner dies, the business is liquidated and becomes a part of the owner’s estate which is distributed to beneficiaries including debts. The executors and beneficiaries may face a lot of problems or issues related to taxation.
9. Unfit For Large Scale Business The limited managerial capability, financial resources and risk makes Sole Proprietorship unfit for large scale operation.

Register your business and get started as a Sole Proprietor today!