There are three different forms of business ownership, the Sole Proprietorship, the Partnership, and the Corporation. Each of these businesses have major advantages and disadvantages.
The sole proprietorship is a business which is owned and managed by one individual. Some of its advantages are, the ease of formation, its management control, and its distribution of profits. Some of the disadvantages are, its unlimited liability, the lack of continuity, the capital requirements.
Let's begin with the advantages. A sole proprietorship is very easy to create. Anyone who wants their own business simply needs to get the necessary licenses from, for example, the state, the county, and/or their local government. After he or she obtain these licenses, he/she can begin operating their business.
In a sole proprietorship, the sole proprietor has full control over his/her operations. Because he/she has this control, they can respond quickly to the changes that may occur in the market.
This is a great motivator for a sole proprietor because he/she can keep up with the trends.
The sole proprietor also owns all the profits that his/her business takes in. They themselves own the business and therefore do not have to distribute the profits with anyone else. The only thing that he/she needs to do with the profits is pay the company expenses and the rest is theirs to do with as they please. This tends to be a great incentive for a sole proprietor.
Next, we have the disadvantages. The sole proprietorship has unlimited personal liability. The sole proprietor is personally liable for all of the businesses debts. He/she is the sole owner, which means there is no one else responsible to contributing to the payment of debts. This is one of the biggest disadvantages of a sole proprietorship.
There is also a lack...