Sole Proprietorship and Partnership

Advantages of a Sole Proprietorship.

1) Freedom and easy to manage.

• Because they own their businesses, sole traders answer to no one but themselves.
• Easy to manage because the owner or proprietor can make decisions by himself.

2) Low start-up costs.

•  The sole trader provides the capital to run the business, enjoys the benefit of any profits and makes his own decisions.
• There are few legal formalities necessary in order to start business as a sole trader.

Advantages of a Partnership.

1) The ability to grow by adding new talent and money.

• Because banks prefer to make loans to enterprises that are not dependent on single individuals, partnerships find it easier to borrow than sole proprietorship. They can also invite new partners to join by investing money.

2) It can be recognized by meeting only a few legal requirements.

• All partnerships must begin with an agreement of some kind. Partners may also agree to bind themselves in ways no specified by law. In many cases, an agreement  should answer questions such as:  

i) Who invested what sums?
ii)Who will receive what share of the profits?
iii)How many the partnership be dissolve? In the event of dissolution, how will assets be distributed?
iv) How will surviving partners be protected from claims made by a deceased partner's heirs?