Sole Proprietorship

Sole Proprietorship

Sole proprietorship is the simplest and most popular form of ownership. This form of business ownership is designed for a business owned and managed by one individual. Sole proprietorship is the easiest kind of business for you to explore in your quest for an interesting career. The sole proprietor is the only owner and ultimate decision maker for the business.

The sole proprietorship has no legal distinction between the sole proprietor status as an individual and his or her status as a business owner. The simplicity and ease of formation makes the sole proprietorship the most popular form of ownership in Nigeria.

Although sole proprietorships are common in a variety of industries, they are concentrated primarily among small businesses unit such as repair shops, small retail outlets, and service providers, for example, such as painters, plumbers, and barbing saloon.

 Advantages of proprietorship:

Following are the advantages of proprietorship

• Least cost of business ownership to establish
• Minimum or no special legal restriction
• Ownership of all profit
• No special taxes since business income and proprietors’ income are taxed as one.
• Maximum incentive to succeed
• Privacy
• Flexibility of operation
• Easy to discontinue

 Disadvantages of proprietorship:

Following are the disadvantages of proprietorship

• Unlimited personal liability
• Limited access to capital for expansion
• Limited skills and abilities
• Feelings of isolation /overwhelming time commitment
• Few fringe benefits
• Limited growth
• Lack of continuity for the business that has a limited life span.