Small Business and Sole Proprietorship
Many
businesses are sole proprietorships, firms owned and operated by a single
person. When a person decides to open an independent business, that person is
then entirely responsible for its success or failure. Any profits go to the
owner; any losses are his or her responsibility as well. If the losses prove to
be greater than the investment, the individual is responsible for paying them,
even if this depletes all personal assets.
One
of the advantages of a sole proprietorship is that an owner can make decisions
quickly and decisively without having to consult others. And an individual
proprietor, by law, pays fewer taxes and at a lower rates than does a
corporation.
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There
are disadvantages to this form of business organization, however. A sole
proprietorship ends with the incapacity or death of the owner. A person who may
then become the operator can inherit the assets, but legally the business dies
with its owner. Also, since it is dependent upon the amount of money the owner
has saved or can borrow, usually it does not develop into a large-scale
enterprise.
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In
spite of its limitations, the sole proprietorship is well adapted to many kinds
of small businesses and suits the temperament of many persons who like to exercise
initiative and be their own bosses. Some of the economic contributions of small
business are, a small business is often the starting point for developing a new
product or service. One person tries out an idea. If it is successful, the
business grows, or a larger firm may buy the product.
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Small
business can give an individual a chance to gain experience, which the person
may use later on a larger scale. Small businesses are particularly well suited
for meeting specialized local needs.
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Artisans
can provide individualized products fro customers who have grown weary of mass
produced goods. Small businesses provide service where knowing one’s customers
is important. Sole proprietors are reassuring to customers who believe an
individual who is accountable will do a good job.
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Small
businesses often grow into larger ones, adding to the economic vitality of the
nation. Small business advocates contend that 55 percent of American technical
innovation comes from small and medium size businesses. Certainly many of the
creative innovators in the American computer industry, including those who
built successful companies in what is now known as Silicon valley, California,
started out as ?tinkerers’ working on hand-assembled machines in their garages. They have become part of American business
lore. By any measurement, small businesses are an important part of the
ferment, the creativity, and the competition that provide new strength to the
American economy.
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Of
course, it is true that small businesses often fail. But in the United States
?failure’ of a small business venture does not carry with it the social stigma
or opprobrium for the failed entrepreneur that it does in some countries.
Often, failure of a small business venture turns out to be a valuable learning
experience for the entrepreneur, who may be more successful the second or third
time. Unsuccessful attempts to start a business become part of the larger
process of sorting out the market and making it more efficient , according to
small business experts.
About the author
John Elton
owns and operates a Best Penny Stocks Picks website to help
other investors with their stock decisions. He also operates a Home
Based Business earn money online site to help entrepreneurs gain experience
and wealth.
Tags: advantages of a sole proprietorship, amount of money, artisans, business organization, economic contributions, incapacity, independent business, initiative, losses, one person, personal assets, Profits, proprietor, scale enterprise, small business, small businesses, sole proprietorships, spite, suits, temperament
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