Sole Proprietorship, Its Benefits and Limitations

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A sole proprietorship is a form of business that is controlled by individuals in various business fields and entities. On the other hand, the partnership involves the formation of a business through a combination of two or more people with the aim of forming a business entity. The formation of a sole proprietorship is simple. The establishment of a sole proprietorship is cheap, simple to organize, and cheap to maintain. Sole proprietorship experiences various limitations.

Raising capital to establish and maintain a business is the biggest limitation faced by potential developers and business owners. The partnership entails the connection between two or more business-minded people with the aim of establishing a business entity. The formation of partnership ranges between two to twenty people. The obligations and responsibilities are equally shared between and amongst the various partners. The formation of a partnership business has various benefits and limitations.

The organization process of partnership is easily established and attained. In addition, the levels of expertise in partnership business are broad due to the presence of various partners who can give various contributions to enhance the growth of the business. The organization of partnership is less costly than the establishment of corporations. The formation and establishment of limited liability companies and corporations are costly than that of the sole proprietorship and partnership.

There are numerous advantages connected to the formation of business entities. However, the limitations of the establishment and running of these businesses depend on the courage and development of strategies to limit the occurrence of the limitations.

There are numerous reasons behind the establishment of entrepreneurs, companies, business entities organizations and institutions. The knowledge acquired in the various institutions gives fundamental basis on the establishment of individual business entities than seeking for white collar jobs. The profits and returns that are realized from the business are enjoyed by the owners of the business. The legal formation of business entities fall under sole proprietorship, partnership, corporations and limited liability companies. The fluctuations in the market prices, recession and inflations create imbalances in the economy of a particular state or country.

Entrepreneurship is divided into sole proprietorship and partnership. The setting up of individual businesses consists of various benefits and limitations. The decision making process is determined by the owner of the business. This allows room for immediate adjustments without prior consultations like in the institutions and organizations.

According to the guidelines given by Joseph Warren, business entities should adopt the spending analysis programs in limiting their spending and concentrating on savings and realization of profits. Hard work and patience are the key features that establish fundamental foundation and establishment of businesses. The positive aspects learnt from an established entity should be reflected on individuals business to enhance a learning and development platform.

The transformation of a person’s passion for establishing and running a certain line of products and services should never be ignored. On the other hand, the passion should be changed into reality by establishing the desired business without relying on external forces and contributions.

In conclusion, the two events acted as an eye opener to the existence of the different business entities, their establishment and operation. In addition, I learnt how venturing into business facilitates courage, determination controlled expenditure and increased saving. The formations of the various business entities and their operations relates with the different content that was learnt in the different topics in class.

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