Question

Sole proprietors often cannot offer fringe benefits to workers. Explain why this could be a disadvantage to the owner of a sole proprietorship.

Answer 1

Answer: less ability to attract required talents as well as retain existing ones.

Explanation: A Sole proprietorship is a business which belongs to only one owner, often not Incorporated and has thesame identity as the owner as he or she goes home with the profit after tax and bear all lost or liability. This business is usually small, easy to startup as well as dissolve as their is no government intervention.

The sole proprietor often cannot offer fringe benefits ( additional benefits offered to employees outside salary or wages) because the business is small and he or she can't afford or bear the cost.

This could be a disadvantage because;

He or She might loss the ability to attract talented employees that may boost the company's image as well as increase general work output as they may be easily enticed by other companies (big companies) with fringe benefits.

The sole proprietor might also loss the the ability to retain his or her talented workers as they also may look elsewhere i.e look to work for companies with better fringe benefits.

The sole proprietor might be pushed into regularly increasing worker's wages or salaries to retain them when a fringe benefit will have sufficed.