Chapter 8.2, Problem 4R

To determine

To evaluate the advantages and disadvantage of being a sole proprietor.

Explanation of Solution

The benefits of the sole proprietor has full ownership right and decision-making authority over the company. Sale or selling may be at the sole proprietors discretion, they don’t have to pay corporate tax, Low legal costs for creating a sole proprietorship, there are lesser formal conditions.

Perhaps some of its drawbacks are that Owners are entirely responsible. When company debts are daunting, the assets of the individual owner would be impaired; self-employment taxes apply to sole ownership, continuation of company ends with the owner’s death or departure. Hard to collect money.

Economics Concept Introduction

Introduction: A sole proprietorship is a kind of business run, funded, and generated by single individual with the primary purpose of profit making. A sole proprietor is an individual company; it's the oldest and cheapest way of managing companies.