1. [ 5.1 ] Sole Proprietorships

2. [ 5.1 ] Sole Proprietorships
Learning Objectives
Explain the characteristics of a sole proprietorship.
Analyze the advantages of a sole proprietorship.
Analyze the disadvantages of a sole proprietorship.
Analyze the economic rights and responsibilities involved in starting a small business.

3. [ 5.1 ] Sole Proprietorships
Key Terms
sole proprietorship
business organization,
business license,
zoning laws.
Liability
Fringe benefits

4. The Role of Sole Proprietorships
You may be one of the lucky people who is able to turn something you really like to do into a business. Imagine launching a Web site that reviews video games, or opening a baseball camp or a car detailing business. One of the many challenges you will face is finding the best way to organize your business.

5. The Role of Sole Proprietorships
Entrepreneurial Spirit

6. The Role of Sole Proprietorships
Art fair vendors may be artists who are sole proprietors. Art fairs provide an opportunity for these sole proprietors to reach more customers.

7. The Role of Sole Proprietorships
Analyze Graphs Based on the graph, how would you describe the size of most sole proprietorships?

8. Advantages of Sole Proprietorships
While you need to do more than just hang out a sign to start your own business, a sole proprietorship is simple to establish. It also offers the owner several advantages.

9. Advantages of Sole Proprietorships
Easy to Start and End
Relatively Few Regulations
Sole Receiver of Profit
Full Control

10. Advantages of Sole Proprietorships
Some sole proprietorships need to be licensed. The owner of a food truck must be licensed to sell food and must submit to inspections to ensure that safety guidelines are followed.

11. Advantages of Sole Proprietorships
Analyze Charts How would the profit of a sole proprietorship change if its expenses increased and its income remained the same?

12. Disadvantages of Sole Proprietorships
As with everything else, there are trade-offs with sole proprietorships. The independence of this form of business organization comes with a high degree of responsibility.

13. Disadvantages of Sole Proprietorships
Unlimited Personal Liability
Limited Access to Resources
Lack of Permanence

14. Disadvantages of Sole Proprietorships
Business costs can be high for a sole proprietor. This floor installer must pay for new equipment out of his own pocket or by taking out a loan for which he is personally liable.

15. Disadvantages of Sole Proprietorships
Analyze Graphs Suppose that 80 new sole proprietorships were started in a city in Based on this graph, how many of these would you expect to still be in business after three years?

16. Quiz: The Role of Sole Proprietorships
Which statement about sole proprietorships is true?
A. Sole proprietorships can be owned by more than one person.
B. Sole proprietorships are the most common form of business organization in the United States.
C. Sole proprietorships generate about 40 percent of all sales in the United States.
D. Sole proprietorships do not have to pay employment taxes.

17. Quiz: Advantages of Sole Proprietorships
Why is it easy to start a sole proprietorship?
A. Sole proprietors do not need to file a lot of paperwork to start a business.
B. Sole proprietors are not subject to zoning laws.
C. Sole proprietors do not have any legal obligations.
D. Sole proprietors do not need to follow any government regulations.

18. Quiz: Disadvantages of Sole Proprietorships
Which is a disadvantage of sole proprietorships?
A. full control
B. few regulations
C. easy to start and end
D. limited access to resources