Sole Proprietorships

1. Sole Proprietorships Chapter 3

2. Introduction • The sole proprietor relies on his or her own finances, skills, and resources to conduct a business.

3. This business model offers several advantages over other types of business organizational schemes but also suffers from several distinct drawbacks.

4. Sole Proprietorship • A sole proprietorship is the easiest type of business to create.

5. A sole proprietor is free of any other influence in deciding how to run his or her business. • Sole proprietors must rely on their own financial resources to run their business.

6. Sole Proprietorship • Because the sole proprietor is, in effect, the business, when he or she is unavailable, no commerce can be conducted.

7. Because there is no legal separation between a sole proprietor and the business, there is no impediment to using profits for personal reasons.

8. Sole Proprietorship • Sole proprietors can “pass through” losses from their business to their personal income tax returns.

9. One of the biggest disadvantages for a sole proprietor is his or her unlimited liability.

10. A sole proprietor might lose all of his or her personal assets to satisfy a judgment.