Business Studies

Sole Proprietorship: Meaning, Advantages and Disadvantages

len Alfred Ajibola - Mon, 22nd April, 2019 @ 10:29 PM

Topics in Business Studies

Business Structure: What is a business structure? Advantages and Disadvantages of franchise What is a franchise? Types of franchise What is Corporation? Types, Advantages and Disadvantages of Corporations What is Limited Liability Company? Its Advantages and Disadvantages Partnership in Business: Types, Advantages and Disadvantages Business Studies: What is Business Studies and Business? Management: Elements of Management What is Management? Importance of Management Advantages and Disadvantages of Air Transport Advantages and Disadvantages of Rail Transport Methods of Payment: Cheque - What is a Cheque? Cheque: Types of Cheque Cheque: Characteristics of Cheque Advantages and Disadvantages of Cheque Advertising and Types of Advertising Advantages and Disadvantages of Road Transport Advantages and Disadvantages of Water Transport Consumer Protection - Agencies of Consumer Protection Consumer Right and Protection


Academic Questions in Business Studies

Please check out our Test Your Knowledge page to see all Questions and Answers

An accounting system focused primarily on a balanced debit and credit side is termed _____.

  • A. Ledger system

  • B. Journal system

  • C. Double entry system

  • D. Balance sheet system

  • E. Principle of accounting system

  • F. Balanced accounting system

With regards to money, which of the following statement is incorrect?

  • A. Money is crucial for the survival of every human being

  • B. Money is completely advantageous

  • C. Money is defined as anything that is generally accepted as a medium of exchange

  • D. Monopoly is said to exist when money and wealth exists in the hands of a few

  • E. Excess money in an economy can lead to inflation

  • F. When a person receives money that isn't commensurate with the job he or she had done, then that's underemployment

Which of the following statement is wrong with regards to business?

  • A. Business involves the exchange of something for another thing or money

  • B. Business is an economic activity

  • C. In business, profit goes beyond money

  • D. Businesses do not have social responsibilities to their customers

  • E. The exchange of services is an aspect of business

  • F. Businesses can be affected by government policies

Consumer _____ are the laws and methods put in place by various agencies so that consumers can enjoy maximum satisfaction on the goods they buy and services rendered to them.

  • A. Protection
  • B. Policy
  • C. Rights
  • D. Defence
  • E. Guide
  • F. Safety

Which of the following is not a characteristics of business?

  • A. The buyer and seller must always come into a contract agreement

  • B. Risk from unforseen circumstances is involved

  • C. They are subject to policies made by the government

  • D. All business transaction is aimed at making profit

  • E. It requires a discontinuous transaction between the buyer and the seller

  • F. Investments are required to begin a business

Which of the following is not a Right of Consumer Protection?

  • A. Right to Education
  • B. Right to Choose
  • C. Right to Safety
  • D. Right to the Good things of Life
  • E. Right to be Assured
  • F. Right to Compel

Which of the following is NOT a government agency of consumer protection?

  • A. Ministry of Sports
  • B. Ministry of Commerce
  • C. Consumer Protection Council
  • D. Ministry of Health
  • E. Ministry of Environment
  • F. National Drug Law Enforcement Agent

Define Consumer Protection.

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Sole Proprietorship:

Sole proprietorship, also called sole trader or proprietorship or individual entrepreneurship, is considered as one of the popular type of business structures. It is an unincorporated entity generally practiced in every country, state or region of the world.

Please read on an introduction to business structures here.

The sole proprietorship form of business structure is a one man or one woman business. If the man or woman is married, both parties (husband and wife) can still be considered as a sole proprietorship.

Sole proprietorship happens to be the easiest business structure to start because the business capital is not necessarily huge.

The taxation of a sole proprietor is significantly lower when compared to other forms of business structure.

Please read on corporation as a business structure here.

Understand that the enterprise of a sole trader have got no legal distinction between the owner and the business itself. In simple terms, the sole trader alone bears all the legal implications that comes along with his or her business, including the positives and negatives.

 

It is important to state that a sole proprietor may not be the only person present (functional) in his or her business. This implies that they may not necessarily work alone especially when they have the capability to employ other people into their business.

The sole traders have got total control over their business because all decisions concerning the business is made by them. To this end, they enjoy all profits (alone) after taxation. This is true because all the business' asset is owned and managed solely by the individual entrepreneurship. Conversely, they are liable for all the loss and debt incurred during the course of business.

Please read on franchise as a business structure here.

Nowadays, obtaining loans to begin a sole proprietorship business structure is easier compared to the past where one will need to depend on their personal income or the use of collaterals.

Note: Different countries have got their respective rules on the sole proprietorship business structure. For instance, a Nigerian in need of a unique business name (in Nigeria) will have to register his or her proprietorship business with the Corporate Affairs Commission (CAC) of Nigeria. Similarly, Ireland as a country requires that a sole trader who intends to use a business name is mandated to register such name with the Companies Registration Office (CRO).

You can read on business and characteristics of business here.

 

Advantages of Sole Proprietorship

  1. You are your own boss.

  2. It requires little capital to start.

  3. The sole trader enjoy complete secrecy.

  4. All the profits belongs to sole proprietorship.

  5. The business legal structure can be easily changed.

  6. The sole trader enjoys fewer government regulations.

  7. Registration of business name is relatively easy.

  8. The sole trade is taxed once. There isn't any form of double taxation in sole proprietorship.

You can read on partnerships, types, advantages and disadvantages here.

 

Disaadvantages of Sole Proprietorship

  1. It's difficult for the sole trader to go on vacation.

  2. Raising capital can become difficult.

  3. The sole trader pays all the tax alone.

  4. The business will likely die in the absence of the proprietorship.

  5. The sole proprietorship is responsible for all liabilities.

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Alfred Ajibola is a Medical Biochemist, a passionate Academician with over 7 years of experience, a Versatile Writer, a Web Developer, a Cisco Certified Network Associate and a Cisco CyberOps Associate.


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Amazing facts in Business Studies

The world's 100 richest people earned enough money in 2012 to end global poverty four times over


NOTABLE POINTS IN Business Studies

Consumer protection refers to the ways or methods through which consumers enjoy maximum satisfaction from the goods they buy and services rendered to them.

The agencies of consumer protection assists in protecting the consumer rights. These agencies may also be referred to as the organs of consumer protection. Basically, we have three of them, they are:

  1. Government Agencies

  2. Independent Agencies

  3. Legislation

Please read on consumer protection here

One of the responsibilities of the government of every nation is to set up agencies or organizations that will protect the interest of the consumers and invariably, the people.

Below are some of the government agencies of consumer protection:

  • National Drug Law Enforcement Agency (NDLEA)
  • National Agency for Food, Drug Administration and Control (NAFDAC)
  • Consumer Protection Council (CPC)
  • Rent Tribunal
  • Ministry of Health
  • Ministry of Commerce
  • Ministry of Transportation
  • Ministry of Environment
  • National Wages and Salaries Commission

Please read on the government agencies of consumer protection here