A basic business legal structure is undeniably the sole proprietorship. Doing business independently without a corporation representing the company, entirely with full authorization and unlimited liability is probably the best choice if you are a new entrepreneur. Despite the fact that many people avoid doing business on their own fearing the fierce competition from bigger companies, sole proprietorship enjoys benefits and advantages that are hard to argue.
a) Limited capital requirements
Especially for start-ups, the sole proprietorship is probably the best business structure due to limited capital funds and set-up fees. Consultants, direct sellers and part-time entrepreneurs find sole proprietorship ideal as there is no need for an expensive start-up base. However, there are minimal legal costs for which you need to inform the Internal Revenue Service (IRS) when you intend to start your sole proprietorship. You also need to start a new bank account for keeping your business transactions separate from personal ones.
b) Full control
As a sole proprietor you are the sole decision maker to decide the type of your business, the key-selling products and the basic structure line. Evaluating the business license, you are in command of marketing issues such as how your products or services will be displayed, their overall layout as well as your company’s presentation. There are no limitations to own creative abilities as the absence of any manager allows you to express your wants and needs and transform them to creative and successful business factors.
Moreover, compared to other business structures, handling money for the business is much easier because a sole proprietorship does not require a payroll set-up. In short, you have full control and decision-making power over your business.
c) Full training
As a sole proprietor you have the advantage of training yourself to run all major departments of your business. From Marketing & Sales to Finance and Purchasing, you can save both time and money in hiring employees and specialists to run each department separately. Instead, you can use this money in purchasing larger amounts of goods. Besides, if you choose to hire employees, you have the freedom to hire and fire without interventions and bureaucracy, which ultimately facilitates your decision making. Quick and immediate decisions can make a business thrive.
d) Better knowledge of the market
From a marketing perspective, as a sole proprietor you have the unique opportunity to know your market in person. You acquire a thorough knowledge of your market, your customers, their needs and wants and you get familiar with their changing requirements on a daily basis. In this context, you build strong customer relationships and you create the basis to form a loyal customer base that will follow your business repeatedly. As a sole proprietor you have to keep your prices competitive and make sure that your products meet consumer needs, especially when facing competition from large corporations.
e) Simple accounting records
As a sole proprietor you don’t have to have a PhD in Finance to keep your accounting records. Normally, accounting records are simple and can be easily monitored by you. All you have to do is keep your receipts of expenses until you file your taxes. Also, as a sole proprietor you have to file the IRS Form 1040, which is the individual income tax return.
In conclusion, it may be challenging to establish a sole proprietorship, but, at the end of the day, considering the advantages derived, it is worth trying it. Apart from the advantages mentioned above, you can easily sell or transfer your business at your discretion, anytime you choose. Therefore, if your sell the right product and you know your market well, a sole proprietorship can turn into a profitable venture that you can run on your own, being motivated and self-employed and without having to share your business secrets or profits with a partner.
Christina Pomoni has acquired her MBA Finance from the American College of Greece. Her advanced familiarity with financial statement analysis, capital budgeting and market research has been acquired through her professional career at high-esteemed organizations. Besides, having lived at Chicago, IL, Boca Raton, FL and Paris, France has helped her, not only to be a successful professional, but mostly to see life under a more creative and innovative perspective.
Since 2005, Christina provides high quality writing services to Helium.com where she is also appointed as a Channel Steward of Economic Values (http://www.helium.com/users/edit_show/279681). Besides, she contributes her knowledge and expertise to several websites and research companies. Her areas of specialization are Business, Finance & Investment, Society, Politics & Culture. She also has a very good knowledge of Entertainment, Health & Fitness and Computers & Technology.
Christina recently launched her own writing company (http://analysiswriting.com).