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Sole Proprietorship

Sole Proprietorship. By : Casey Merz, Abbie Predmore, Alex Costello, & Jessica Dunn. Explanation.

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Sole Proprietorship

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  1. Sole Proprietorship By : Casey Merz, Abbie Predmore, Alex Costello, & Jessica Dunn

  2. Explanation A sole proprietorship is also known as the sole trader or just a proprietorship. This is a type of business entity where the business is owned and run by one individual. In a sole proprietorship there is no legal distinction between the owner and the business.

  3. Explanation The owner receives all the profits and is responsible for all losses and debts. Every asset of the business is owned by the individual and they are solely responsible for for all debts.

  4. Pros • Sole proprietorships are easy to organize- only small amounts of capital are needed to start and run a business • The owner makes all the decisions- you are your own boss • There are minimal legal restrictions • The owner gets all the profits • Losses can offset other income • It’s easy to close • There’s no risk of fraud by a partner

  5. Cons • If the company is sued, the owner’s personal assets are at risk • There’s limited ability to raise business capital • The owner is responsible to pay income and SE Tax on all profits from the business • There are limited resources- banks are reluctant to grant loans because of small assets and high mortality rates • Unlimited liability for business debts- the single owner responsible for paying all of the debts and damages of their business • If a firm fails, creditors may force the sale of the proprietor’s personal and business property • When the owner dies, the continuation of the business is difficult because the new owner must accept all liabilities of the business

  6. Example - Sam Wexler Plumbing - All aspects of the business are owned and controlled by sole proprietor, Sam Wexler -Wexler is entirely liable for the business and his paid workers

  7. Example: Small Restaurant - The Cast & Crew • All aspects of the business are owned and controlled by sole proprietor, Chef/ Owner Aaron Hulslander • Hulslander is entirely liable for the business and his paid workers (Sous Chef: Ben Rumsey, and Cooks: Mark, PJ, Breeann) • “The food is amazing”

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