Question

You would like to start a cellular telephone equipment service business. You are considering organizing the business as a sole proprietorship. Identify the advantages and disadvantages of owning a sole proprietorship. Three advantages of owning a sole proprietorship 1. Unification of ownership and management. 2. Easy to organize. 3. No continuous life or transferability of ownership 4. No income tax on net income. 5. The owner pays taxes on proprietorship's earnings since it is not a separate tax entity. 6. Unification of ownership and management.7. Unlimited liability of owner.

Answer 1

A sole proprietorship is a business owned and run by one person. It has advantages such as easy organization, total control, and tax benefits, but also disadvantages like unlimited liability, difficulty in raising capital, and lack of continuity.

Explanation:

A sole proprietorship refers to a business owned and run by one person. While there are advantages to owning a sole proprietorship, there are also certain disadvantages to consider:

Advantages:

1. Easy to organize: Starting a sole proprietorship is relatively simple and does not involve complex legal procedures.
2. Total control: The owner has complete control over all aspects of the business and can make decisions without consulting others.
3. Tax benefits: The owner only needs to pay personal income tax on the profits of the business, rather than separate business taxes.

Disadvantages:

1. Unlimited liability: The owner is personally liable for all debts and obligations of the business, which means personal assets could be at risk in the event of bankruptcy or lawsuits.
2. Difficulty in raising capital: It can be challenging for sole proprietorships to raise capital since they rely solely on the owner's personal funds or loans.
3. No continuity: If the owner retires or passes away, the business may not continue to exist.

Answer 2

Answer and Explanation:

The advantages and disadvantages of the sole proprietorship is as follows:

Advantages

1. It is easy for organizing

Disadvantages

1. Unlimited owners liability

2. pays taxes on earnings as it is not a separate tax entity

3. There is no continuous life or ownership transfer

So in this way it should be allocated on advantages and disadvantages