Advantages And Disadvantages Of A Sole Proprietor
. A sole proprietorship is a form of business where there is only one owner, and there is no legal distinction between the business and the owner. Let's look at what operating as a sole proprietor means for Beth.
Advantages of Sole Proprietorship
Operating as a sole proprietor offers some distinct advantages for Beth. It's a pretty simple and easy type of business organization to manage. As we mentioned earlier, there is no legal distinction between her and the bookstore. Beth is her bookstore, and the bookstore is Beth. So, she doesn't have to worry about a board of directors or shareholders. Beth is the one and only boss answerable to no one but her customers and creditors. This also makes it easy for Beth to cash out and sell her bookstore when she wants to do so. …show more content…
And she doesn't have to file anything with the state or keep special types of organizational records, like corporate bylaws and meeting minutes. Since she doesn't have to hire accountants and lawyers to prepare paperwork and advise her on complicated laws, she saves a bunch of money.
Income taxes are also a snap compared to corporations because Beth and her business are one and the same in the eyes of the law. Beth is the only taxpayer. She simply reports her business income or loss on her personal tax return. This also means there is no double taxation like with a corporation where the corporation is taxed on its income, and then its shareholders are taxed on dividends distributed to them from the corporation's