Liability: One of the primary disadvantage of being a sole proprietor is that the liability gets unlimited over time and the owner is solely responsible to repay it.
Income taxes: Since a number of companies don’t apply for registration they are exempted from tax liabilities. Owner does not have to file for a tax report separately from the business. He simply lists down the business performance and figures in his personal tax return filing. Hence, business is taxed as per personal income tax rate and not the company tax rate.
Longevity or Continuity: Continuity and termination of the company is easier and simpler as it is not eligible for termination laws. If the owner dies, the business dies too.
Control: One of the primary advantages of running a sole proprietorship is the ultimate control of the single owner over the resources, decision-making and company’s overall capital.
Profit retention: Profit retention is a major advantage as the owner gets the entire share in profit, which he can either reinvest or utilize for personal use.
Location: In general, formation of a sole proprietorship is simple and easier and doesn’t involve complex regulatory or registration requirements. It can be located anywhere.
Convenience or burden: Sole proprietorships are restricted to a smaller operational setup because of the limited budgeting and the limited capital assets that make expansion almost impossible. The business is discontinued if the owner passes away or is executed through lawful trials. In case of his death, his business is liquidated and all the resources are paid to the beneficiaries. In such a scenario, there can be a heavy tax burden over heirs because of the government-imposed inheritance tax.
Liability: Liability in a general partnership is shared either equally or according to the partnership agreement, hence, limiting the content of ‘unlimited’ to some extent.
Income Tax: General partnership tends to offer...