What are the advantages and disadvantages of the sole propriertorship compared with those of a partnership?
There are advantages and disadvantages of both types of business organizations. The sole propriertorship is a business owned by one person. They are easy to form, the person is his or her own boss, and does not have to share any of the potential profits. Among the disadvantages of this type of business organization are limited days off, limited capital (money)for re-investment or repairs, and the life of the business depends solely on that person unless another family member takes it over upon time of retirement or death. The partnership allows the concept of "two heads are better than one" to work for success. It also allows for additional capital to enter into the business, however partners can disagree, trust is an absolute mandate,profits must be shared, and it too has a limited life depending upon owner interest. Any individual who owns their own business must evaluate both the advantages and disadvantages if they are thinking of expanding that business. It would also be important to include the possibility of incorporating the business. In incorporating a business the owner or owners protect themselves of any liability their business might have. In that way the owners cannot be personally financially responsible for any debt incurred by the business. The business itself is treated as a 'person' in the eyes of the court.