Why Sole Proprietorship Might Be An Advantage
October 17, 2019 (Investorideas.com Newswire) Starting your own business is an excellent way to convert your hard work into a financial fortune, but only if you know how to go about doing it properly. While countless entrepreneurs have an excellent business idea or cunning plan for outmaneuvering their competitors, few of them have given sufficient thought to what specific legal entity they hope to form when they eventually establish their business as a real commercial operation.
Far too often, entrepreneurs ignore sole proprietorship and the myriad of advantages it can deliver to you. Here's why owning a sole proprietorship could give you a leg up on the competition, and how to go about forming one if you're interested.
What is a sole proprietorship?
You can't possibly hope to understand the advantages wrought from a sole proprietorship until you actually know what it is and how to go about forming one. A sole proprietorship is relatively straight forward and easy to understand - you need not necessarily file papers with the state government or federal government, though local regulations may prohibit you from doing business until you obtain a license. It's imperative to understand that there is no legal distinction between your business and you as an individual when you operate a sole proprietorship - you are responsible for all the profits you'll earn, but you'll also be held accountable for any debt you accrue.
Being responsible for the debt you may accrue is an important thing to keep in mind. It's why some people avoid sole-props, though just as many if not more are attracted to sole proprietorships precisely because they reward you and you alone if you face success in the market.
Some states will require you to choose your business name before you can really get up and running as a commercial operation. Check out the U.S. Small Business Administration's helpful webpage which lets you search to see if your name has already been taken. Registering your name is important, as it lets you protect your brand, which could be copied or disparaged by your competitors if they want to steal your financial thunder and the profits that go with it.
This is also a good time to review why business partnerships are often the financial kiss of death - if you have one idea for the company name or brand image and it clashes with the ideas of your business partner, that feud could easily spiral out of control. Sole proprietorships need not concern themselves with such petty squabbles, however, as you won't have a business partner to second guess and hold you back as you foray into a competitive market where you'll need your wits about you to thrive. Tax filings are also much simpler to manage, which will be a breeze when the IRS comes calling.
Be wary of incorporating
Many business guides encourage entrepreneurs to incorporate, when in reality this can be a complex affair that leads to financial calamity. The differences between corporations and proprietorships aren't always easy to parse, but managing the former is usually much more complex and time-consuming than the latter. Furthermore, individual entrepreneurs who don't feel the desire or need to run a large team will usually benefit much more from a sole proprietorship than they would from incorporating, as that move is usually saved for fast-growing businesses with lots of workers who may need legal protection.
It should thus be easy to see why a sole proprietorship could give you a huge advantage when it comes to earning a buck - not only will you have less paperwork and complexity to worry about, but you'll also be the singular individual in charge and won't have to worry about being second-guessed at every available opportunity. For strong headed entrepreneurs eager to let their own talents shine, sole proprietorships are often the only feasible way to dominate the marketplace without getting bogged down in business excesses and frivolous meetings with others.
Nevertheless, always remember the financial obligations you must maintain if you're a sole proprietor. By exercising fiscal responsibility, though, you'll quickly learn that being a proprietor gives you greater financial freedom than most other arrangements. Before long, you'll be standing astride the marketplace with nobody else to thank for your success but you own hard work.
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