Question

Imagine that a friend tells you about their idea to start a sports therapy clinic which they plan to operate as a sole proprietorship. What benefits and risks would you advise your friend to be aware of?

Answer 1

Following are the benefits are involved into sole proprietorship for of business organization.

(1) In this form of business proprietor has complete control over the business activities and there is no interferance of any one in decision-making.

(2)Sale or transfer of business or assets of business can take place at the discretion of the sole proprietor.

(3) No tax is needed to pay on the income of businness, sole properiter would be taxed at individial tax rate

(4) formation cost of this kind of business is relatively low.

(5) Low level of legal formalities and requirements are fulfilled in this form of organization

Disadvantages of a Sole Proprietorship

(1) owner is personally liable for the debts and obligation of business

(2) It is difficult to find investors in case of expansion of business

(3) Sole propreiter is solely responsible for the decisions.