Sole Proprietorship

Lester Stoffels
Mind Map by Lester Stoffels, updated more than 1 year ago
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Description

Sole Proprietorship
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Resource summary

Sole Proprietorship
1 Advantages
1.1 Cheap to start
1.2 Only a trading licence required
1.3 Owner can easily adapt to changing circumstances
1.4 Owner makes independent decisions
1.5 All profits belong to owner
1.6 No name required by law

Annotations:

  • and the name will usually be singular, for example Aviwe's Pie shop
1.7 Owners gain experience in all aspects of business
2 Disadvantages
2.1 Capital is limited

Annotations:

  • To what one person can contribute
2.2 Unlimited liability

Annotations:

  • Means that the personal assets of the owner are at risk.
2.3 Lacks continuity

Annotations:

  • The sole proprietorship lack continuity and the form of ownership therefore ends with the owner.
2.4 Owner must perform variety of tasks
2.5 Finance is difficult to obtain

Annotations:

  • Due to a lack of legal personality.
2.6 Difficult to retain service of competent employees
3 Characteristics
3.1 Only a trading licence is required
3.2 Business is not a legal entity

Annotations:

  • which means that the owner enters into contracts in his  or her own name, can sue and be sued
3.3 Unlimited liability exist

Annotations:

  • and therefore the owner may lose personal assets to settle business debts.
3.4 Has no continuity
3.5 If owner dies then ownership ends
3.6 Is not a legal person and therefore is not taxed
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