E. Napp Sole Proprietorship In this lesson, students will identify characteristics of sole proprietorships. Student will be able to identify and/or define the following terms: Business Organization Sole Proprietorship Zoning Laws Liability

E. Napp A business organization is an establishment formed to carry on commercial enterprise.

E. Napp Sole Proprietorship A sole proprietorship is a business owned and operated by an individual. Most businesses in the United States are sole proprietorships. However, sole proprietorships account for a small percentage of total sales in the U.S.A.

E. Napp A sole proprietorship is a common and popular form of business in the United States.

E. Napp Advantages of Sole Proprietorships The greatest advantage of owning a sole proprietorship is the ability of the owner to make all decisions. The owner also keeps all profits after taxes. Many people enjoy being the boss.

E. Napp The sole proprietor is the boss of his business. He makes all decisions and keeps all profits after taxes.

E. Napp Disadvantages of Sole Proprietorships The greatest disadvantage of a sole proprietorship is that the owner has unlimited personal liability. Unlimited personal liability means that the owner has the obligation to pay all debts. Liability is the legally bound obligation to pay all debts.

E. Napp If the business is sued, the sole proprietor can lose not only the business but his personal property.

E. Napp Zoning Laws While there are few laws regulating sole proprietorships, zoning laws do restrict where businesses can be located. A zoning law is a law that states where businesses can be established in a town. Generally, towns have business districts and residential neighborhoods.

E. Napp A business district is a section of a town where businesses are located.

E. Napp Fringe Benefits Sole proprietors have a hard time attracting good workers because they cannot afford fringe benefits. Fringe benefits are payments other than salaries. Paid vacation and health insurance are examples of fringe benefits.

E. Napp Health insurance is a fringe benefit. Sole proprietors usually cannot afford to offer their workers such benefits.

E. Napp A sole proprietorship is the least-regulated form of business in the United States.

E. Napp Questions for Reflection: Define business organization. What is a sole proprietorship and why is it the most common form of business organization in the United States? Why do sole proprietors have unlimited personal liability? What are zoning laws and how do they affect neighborhoods?