My imaginary business for the semester is for sales and marketing of the ladies’ handbags. The name of my business is Elite Handbags Marketing. Among the forms of business ownership that we learnt in class I would like to pick on sole proprietorship for my preferred business due to some of the advantages that it has over the other forms of business ownership.
Advantages of sole proprietorship
Among the list of business ownership, sole proprietorship is considered as the simplest form of business because it has little and non-complicated requirements as compared to the other forms. Apart from the fact that most of the business people prefer it, it is also individually owned. One advantage is that the owner has overall control of the business and therefore easily makes decisions of the business without having to consult anyone. The second advantage is that the sole trader always enjoys the profits by himself without sharing unlike partnership where the profit is divided amongst the partners. The third advantage is that the cost for starting up and running sole proprietorship is low as compared to the costs for starting up other businesses for example partnership. The business only requires low legal expenses and the corporate taxes are not required (Zing 9).
Disadvantages of sole proprietorship
Anything that has advantage must have a disadvantage on the other hand and so is the sole proprietorship type of business. One disadvantage of sole proprietorship is that the owner may experience difficulties in raising the capital since he is the one responsible for generating the initial finances of the business. They may also experience difficulties in acquiring loans especially when they do not have adequate credit to secure the added money. The second disadvantage is that the business ca not continue when the owner dies. In case of death or incapacitation the business ends there and no more continuation because the owner is only one. The third disadvantage of sole proprietorship is that the owner of the business bares all the losses that occur in the business, when the debts become too many, the business owner takes the responsibility and at times he or she uses his own finances (Abdul, 750).
I chose sole proprietorship to be the best for my business because it will not take me a lot of time to make the decisions of the business on how to manage and run it. I will also get accessed to all the profits that are generated in the business without having to share with anyone. The legal expenses that are required for my business are cheap and therefore I won’t require a lot of capital to initiate my business.
Second I would pick on the partnership form of business ownership. Partnership is a business operation between two or more individuals. The partners normally invest in the business and in the end share the profits or losses generated in the company.
Advantages and disadvantages of partnership
The first advantage is higher management capability. Due to the fact that many partners are involved in the operations of the business, they always work together to ensure the success of the business (Nguyen 59-66). The second one is large amount of capital is generated from the entity due to the combined hard work of the partners. The following are the disadvantages; disagreements rising among the partners may bring conflict in the business. There may also be misuse of the resources of the business by the partners, (Ding 115). The reasons as to why I did not choose this form of business are because of the disputes that might rise between the partners when making decisions and also unmoving investment in the business.
Work Cited
“A guide to business structures in Afghanistan : sole proprietorship, partnership, limited liability corporation, and corporation / authors Abdul Waris Hakim Syal , Samira Abrar, Mohammad Arif Noorzai.” 2015.
Ding, Ang. “A Study on the Tendency of Sole Proprietorship for American-Funded Investment in China and Our Countermeasures.” International Journal of Business and Management, vol. 4, no. 9, 2009.
Ding, Ang. “Chapter 1. Hook Up or Stay Solo: The Benefits of a Partnership.” Business Partnership Essentials, 2017.
Nguyen, Dung N. “Vietnam-U.S. relation: from normalization to comprehensive Parnership – an overview.” Science and Technology Development Journal, vol. 19, no. 4, 2016, pp. 59-66.
