“It is better to be alone than in bad company”
This is what the first president of the United States George Washington said. I am not sure what the purpose of this sentence was but I think this is true for both personal and professional purposes. Your dream is yours and you are the person who will give maximum value to that dream. Each and every business starts from a dream. Some dreams come alone and the dreamer works alone to make the dream true, or sometimes the dreamer searches for a few likeminded people so they can work together to make the dream true.
Today I am going to write about the advantages and disadvantages of sole proprietorship business I have encountered while running my own business.
What Is A Sole Proprietorship?
This is a type of business with only one owner, who is responsible for all kind of profits or losses. The owner will have the power to control the whole business and can make decisions alone.
Most small businesses in the world are sole proprietorship businesses and these kinds of businesses are a continuing source of dynamism for the world’s economy.
Advantages of Sole Proprietorship
No one can live alone; each and every one of us depends on others to make their life smooth. But it is true the less dependent you are on others the more stress-free life you can lead. In a sole proprietorship business you are one who makes the decisions. So less dependency can help you to make plans and decisions faster and stress free.
Ease of Formation
Less formality and less paper work are a few of the big advantages of this kind of business. You are the boss of this business so you just need to make sure you have the idea of what you are going to do. You don’t need to wait for someone else to take action.
No One Can Hold You Back
You are the only responsible person for making decisions, taking action, and monitoring the business so you don’t have any scope to blame someone else. If you take the right decision then you are going to achieve success or if not then you might fall down. But no one else can push you back. You don’t have anyone to blame for wrong decisions.
Possible Tax Advantage
As a sole proprietor, you will pay taxes the same way you pay as an individual. Actually, you will file your taxes just once including your personal financial data together with your business finances. You can file your personal uses as business expenses where feasible. For instance, if you use the same car for personal use as for business deliveries you can file most of the car expenses as business expenses and this may result in tax exemptions or deductions.
Disadvantages of Sole Proprietorship
Limited Financial Resources
When you are alone in business then you have an advantage that all the profits will be yours. But think differently; how much can you invest on your own and how big a risk can you take on alone? Most times you will experience budget problems if you want to invest in something big. You will also be afraid to invest lots because if it falls down you will lose everything and nobody will be there to help you. This is one of the big disadvantages of sole proprietorship business.
Plan Making Difficulty
All business owners or the responsible person face some problems which may confuse them when creating plans or taking action. What to do? Is it the right way to go? If you are running your business alone then you will not have many people beside you to assist in these types of problems. No one will be there to offer you the better solution.
This is not a drama or a sole proprietor is not a person with superpowers. All of us have a threshold for creativity and taking stress. We can’t take more than the load then we can tolerate. In a sole proprietorship business you will always suffer from excessive workload. This is another big problem which influences people to run a business with likeminded partners.
Difficult to Expand the Business
As I just mentioned that alone you can’t handle the excessive workload so it will be very difficult to expand the business. Still, people can expand their business and can also run some other business but it normally takes more time than partnership business.
These are a few common advantages and disadvantages I faced in my career, but still I am happy to run my business alone because in partnership there are some problems as well. Learn more about partnership business.
Have a profit building week.