Advantages of Sole proprietorships

The most common and simplest form of business is a sole proprietorship. Many small businesses operating in the Canada are sole proprietorships. An individual proprietor owns and manages the business and is responsible for all business transactions. The owner is also personally responsible for all debts and liabilities incurred by the business. A sole proprietor can own the business for any duration of time and sell it when he or she sees fit. As owner, a sole proprietor can even pass a business down to his or her heirs.

In this type of business, there are no specific business taxes paid by the company. The owner pays taxes on income from the business as part of his or her personal income tax payments. Sole proprietors need to comply with licensing requirements in the province in which they’re doing business, as well as local regulations and zoning ordinances. The paperwork and formalities, however, are substantially less than those of corporations, allowing sole proprietors to open a business quickly and with relative ease – from a bureaucratic standpoint. It can also be less costly to start a business as a sole proprietor, which is attractive to many new business owners who often find it difficult to attract investors.

Disadvantages of Sole proprietorships

The sole proprietor of the business can be held personally liable for the debts and obligations of the business. Additionally, this risk extends to any liabilities incurred as a result of acts committed by employees of the company.

• All responsibilities and business decisions fall on the shoulders of the sole proprietor.
• Investors won’t usually invest in sole proprietorships.

 

Please see your accountant at Brampton

for more information about which business you should registered.