Chapter 11 Business Organizations November 10th 2014 11 1 Sole Proprietorships Learning Objectives proprietorship Sole Proprietorships and its owner Understand the importance of sole proprietorships in our economy Assess the disadvantages and dangers of doing business as a sole Explore the advantages presented by doing business as a sole proprietorship Type of business where there is no legal distinction between the business o Most common form of doing business in the United States Entrepreneur Person who organizes a business and carries the risk of loss and reward of profit with it o Obtains permits or licenses depending on the business before they can begin operating o Utilizes venture capital up business Venture Capital Money invested in an unproven or new start Advantages and Disadvantages of Sole Proprietorship Summary A sole proprietorship is an unincorporated business owned and run by only one person It s the easiest and most straightforward type of business entity to form There are no documents to be filed unless the business owner wants to do business under a trade name or assumed name In this case the business owner needs to file a doing business as form with the proper government office There are several advantages to sole proprietorships For instance the business isn t taxed Instead the business profits are considered to be the business owner s income The business owner pays income taxes on the profits Also many people enjoy owning a sole proprietorship so that they can freely and easily make business decisions These business owners don t have supervisors and typically don t have employees when starting the business There are several disadvantages to sole proprietorships as well For instance the business owner is personally responsible for all business debts and other liabilities Additionally sole proprietorships often find it difficult to borrow money or obtain investors
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