This allows the owners to depend on themselves and manage the business however they would like. However, this form of business also has disadvantages. First off, the owner has unlimited liability over all of his business debts and lawsuits (if any), meaning that the owner is personally and fully responsible for whatever occurs. In case of a lawsuit loss, the owner would have to give up his business, as well as other personal assets. Also, since there is only one owner and one source of direct, primary capital, it is usually hard to increase profits or expand the business without the presence of other managerial figures helping out.
Overview:.
Advantages Disadvantages.
• small, easy to maintain, set up and dissolve
• no taxation, other than the income tax
• no one to answer to; be your own boss
• little governmental regulation
• unlimited liability, high-risk
• business capital directly related to personal finances
• hard to expand, increase profits
• personal property at risk.
Partnership.
A partnership is another type of business, but it is very similar to the sole proprietorship. It is also generally a small business, however an association of two or more owners runs it. There are two types of partners as well. A general partner has liability for business debt and also has active say in this business" management. A limited partner on the other hand, serves only as an investor and isn't liable for any debts that the business may incur. The investor or limited partner signs a contract stating what he will get in return for his investment. At the due time, he is given not more, not less. General partners, all of whom can dynamically collaborate and break up the work amongst them, run most partnerships. Partnerships" success levels directly reflect the cooperative abilities of the partners running the business operation.