Major sole proprietorship advantages and disadvantages

Sole proprietorship advantages and disadvantages and the examples we have in the business organisation. This is equally reffered to as sole trader or one man business.

This is business owned by one person and the oldest form of business.

The owner may operate on his or her own, or may employ others to work for him or her. Such businesses are usually small and usually operate in the services or retail goods services.

Sole Proprietorship is the simplest form of business ownership and the easiest to start. In most instances, the owner(sole proprietor} simply decides he or she is in business and begins operation.

We have sole proprietorship advantages and disadvantages or you can as well say pros and cons, which helps to understand how good or bad the business is.

Sole Proprietorship Advantages

Sole Proprietorship Advantages And disadvantages

We have lots of advantages of sole proprietorship organizations or the sole proprietorship advantages. They are;

Ease of Entry And Exit

One of major sole proprietorship sdvantages in an Organizing and starting a sole proprietorship involves fewer obstacles than the obvious start up problems common to all business  sole proprietor has few obligations.

In some communities and in some areas of business, special license may be required by the local authorities, but such is not normal in the case.

In similar fashion, exit from the business is more simplified process for the sole proprietor than for other forms of organization. A sign on the window, a bolt on the door, and the business is closed.

Full Managerial Powers

Second sole proprietorship advantages is the full managerial powers.

This is the main advantages of sole proprietorship advantages is the right to have  managerial power on the part of the proprietor.

This advantage is usually a major factor citied by those who began the sole proprietorships.

People, it seems like be their own boss. Nonetheless, this advantage contains a strong qualification, for it is one thing to desire full managerial authority and another to be a truly qualified manager.

Indeed, statistics have shown that the major reason for the failure of small business has been managerial incompetence in one or more areas vita to success.

Rights To All Profits

The third sole proprietorship advantages is the right to all profit. Inherent with this advantage, however, is the undeniable fact that all losses also accrue to the sole proprietor.

While all proprietors enter business with expectation of making profits, the risk is always there that such profits may not materialize and that losses will result instead.

Tax Benefits(sole proprietorship advantages)

Another sole proprietorship advantages on the list is the tax benefits.

The benefits relates to the tax treatment accorded sole proprietorship profits. The law does not distinguish between profits earned by the sole proprietor or the business.

For tax purposes, all such incomes are treated as belongings to the individual proprietor, and are thus taxed at the individual rate.

For most proprietorship, this has the effect of taxing business profits at lower rate than for incorporated business.


The sole owner of a business is completely free to make decisions about the firm operations.

Without asking or waiting for anyone’s approval, a proprietor switch from relating to wholesaling, move a shop’s location, open a new store, or close the old ones.

Also owner can respond to changes in market conditions much more quickly than the partnership or corporate form of business.

For example, a sole owner of an appliance store finds that many customers now prefer to shop on Sunday afternoons.

He or she can make an immediate change in business hours to take advantage of that information.

Furthermore, a sole proprietor can quickly switch suppliers to take advantage of a lower price, whereas such a switch could take weeks in a more complex business.


Another sole proprietorship advantages is security, they are not required by the government to publicly reveal their business plan, profit or other vital facts.

Therefore, competitors cannot get their hands on this information.

Of course, Sole Proprietorships must report certain financial information on their personal tax forms, but information is kept secret by the tax authorities.

Next is the sole proprietorship disadvantages.

Sole Proprietorship disadvantages

Despite the many significant advantages of the sole proprietorship, there exist some disadvantages which tends to mute the overall attractiveness of this form of business organisation.

The disadvantages includes;

Limited Life Span

This is one major sole proprietorship disadvantages. Sole Proprietor have the unfortunate characteristics of possessing a limited life span.

This is so because the sole proprietorship has only one owner, the life span of the business cannot exceed that of the proprietor.

The limited disadvantages tends to lead to get another disadvantage.

The Characteristic of Limited Size

Businesses become large only with the benefit of two factors: time and capital. Because a sole proprietor ship’s life span is limited, most such organization lack sufficient time to grow large

Additionally, only one owner exists to provide the capital necessary to attain large size. When these two items are combined, the reason for the generally small size of most sole proprietorships becomes clear.

Unlimited Liability

Another sole proprietorship disadvantages is unlimited liability.

This is a legal concept that holds a sole proprietor personally responsible for all the debt of his or her business.

This means there is no legal difference between the debts of the business and the debt of the proprietor.

If the business fails, the owner personal property including house, savings, and other assets can be seized(and sold if necessary) to pay creditors.

Unlimited liability is thus the other side of the owner keeps the profits coin.

It is perhaps the major factor that tends to discourage would be entrepreneurs with substantial personal assets from using this form of business organisation.

Lack of Opportunity for Employees

The sole proprietor may find it difficult to attract and keep competent help. Potential investors may feel that there’s no room for advancement in a firm whose owner assumes all managerial responsibilities.

And when those who are hired are ready to take on added responsibility, they may find that the only way to do so is to quit the sole proprietorship and work for a large firm or start their own business.

Limited Business Skills and Knowledge

The sole proprietor is often the sole manager in addition to being the sole salesperson, buyers accountant, and on occasion the janitor.

Even the most experienced business owner is unlikely to have expertise in a these areas.

Consequently unless he or she obtains the necessary expertise by hiring assistants or consultants, the business can suffer in the area in which the owner is less knowledgeable.

Sole Proprietorship Examples

Next is the sole proprietorship examples and i will start from popular company’s which excelled from this form of business organisation is Guinness Plc and leventis Nig Plc, Coca-Cola company etc.

The major examples of the sole proprietorship includes the following;

Computer Repair Services

Computer repair companies are often operated as sole proprietorships. Some business owners operate commercial shops, while others work from home. Small computer repair businesses typically cater to individuals.

Freelance Writer(sole proprietorship examples)

Some freelance writers operate as independent contractors, while others start small publishing companies.

A freelance writer provides content to businesses owners or writes content to sell to consumers.

Press releases, sales copy, website content and blog posts are commonly provided by freelance writers.

Financial Planner

Sole proprietors work as financial planners, offering their services to individuals and small businesses.

They help families plan for retirement, save for college expenses and invest in securities.

Financial planners catering to businesses may help a company set up its employee retirement packages and other employee benefits.

These are the sole proprietorship advantages and disadvantages or the pros and cons, and also the examples of it we have. Your questions and suggestions are highly welcomed here, as i’m here to assist you.

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