Question

What are the primary advantages to choosing a sole proprietorship? Select all that apply.

Answer 1

The advantages of chosing the sole proprietorship model are the following:

• It can be inexpensive and easy to set up.
• Many types of business taxes are not required.
• Owners can keep profits for themselves.

The sole propietorship is a format of enterprise ownership through which a single person or entrepeneur owns and runs the firm. This person earns all the profits generated and has unlimited liability for losses or debts. In general, this figure of the entrepeneur tries to be fostered. This is why many countries tend to reduce the initial costs required to set such a firm, and why these enterprises do not have to pay certain taxes as for example, there is not a corresponding tax for sole propietors similar to the societies tax.

This person is the only one making the decisions and the only one accountable for the finances of the enterprise, for example concerning debts. Therefore the owner is liable for those debts.