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Understanding Sole Proprietorship for Small Business Owners

Learn about Sole Proprietorship, advantages, disadvantages, zoning laws, liability, collateral, and more in Chapter 7. Identify local independent businesses and national chains in your community. Complete assigned homework tasks.

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Understanding Sole Proprietorship for Small Business Owners

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  1. Bell Ringer #1 – 11/15/10 We will begin Chapter 7 “Business Organizations” today. In your notebook, list 5 independent (non-chain) businesses in your community. List 5 “chain” or national companies to which you give business.

  2. Sole Proprietorship • A business owned and controlled by one person (self-employed) • The oldest, simplest, and most common type of business organization • Ex: House cleaner, plumber, lawyer, carpenter, hairstylist, farmer

  3. ADVANTAGES Easy start-up, require small amounts of $$ Full control Exclusive rights to profits DISADVANTAGES Liability Sole responsibility Limited growth potential Lack of longevity Sole Proprietorship

  4. Zoning Laws • Zoning Laws – specify areas of a city where various types of business activities can be pursued. • Proprietorships must observe zoning laws, and some don’t allow for home businesses.

  5. Liability • Liability is a debt obligation; proprietors have unlimited liability (responsibility) for business debts • Owners of failed businesses may have to sell personal belongings in order to pay back tough debts

  6. Collateral • Banks or lenders often require sole proprietors to put up collateral - item of value that a borrower agrees to give up if he/she is not able to repay a loan • Ex: The business itself, their house, car, personal possessions • Ms. Maher requires collateral when borrowing a pen or pencil

  7. Homework • Read Ch 7, Sn 1 (pgs 145-149) • Complete questions 1, 2, & 3ab on page 149. • Due Wed 11/17

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