Why is the sole proprietorship business form so popular with people who want to start a business? It is the simplest and least expensive business structure to establish, due to a sole proprietor need only register his or her name and secure local licenses, and the sole proprietor is ready for business. It is easy to change your legal structure later if circumstances change. The entrepreneurship has the complete control over all decisions.
He needs not to consult with anyone else when he need to make decisions or want to make changes. It has easy tax preparation. His business is not taxed separately, so it’s easy to fulfill the tax reporting requirements for a sole proprietorship. The tax rates are also the lowest of the business structures. Employees. Sole proprietorships can hire employees. This can lead to many of the benefits associated with Job creation, such as tax breaks. Ease of money handling. It easier to obtain handling money than in other legal business structures.
And he does to need any payroll set-up to pay himself. The sole proprietor can own the business for as long as he or she decides, and can cash in and sell the business when they decide to get out. The sole proprietor can even pass the business down to their heir, common practice. What are the advantages for Larry Nicola? He has the freedom of choice to do things his own way. And if he sees something going wrong, he can correct it. So we can say that he has the complete control of his business. For example; he made the menu choices and saw that the food was cooked to perfection.
Another advantage is that he was a chef, so he knows how he can kept on top of new industry trends and how to change the menu to reflect the emerging tastes of customers. 2. What type of liability do sole proprietors have if their business suffers a large loss? The disadvantage of being a sole proprietorship is that he has an unlimited responsibility. This means that if his business suffers a large loss the business owner will be held directly responsible for any losses, debts, or violations coming from the business. For this reason this kind of enterprise has a considerable sis. . If Nicola decided to raise $1 million and expand his restaurant, could he do this as a sole proprietor or would he have to form a partnership or corporation? Explain. If Nicola decided to raise $1 million and expand his restaurant, he would need to change the legal structure of the enterprise, and transform it in a corporation. Because the initial founds are usually provided by the owner, and it can be difficult to generate capital. And the problem is that sole proprietorship does not issue stocks or other money generating investments like corporations do.