Sole Proprietorship

1
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

2
A business organization is an establishment forme
d to carry on commercial enterprise.
3
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.

4
A sole proprietorship is a common and
popular form of business in the United States.
5
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.

6
The sole proprietor is the boss of his business.
He makes all decisions and keeps all profits
after taxes.
7
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.

8
If the business is sued, the sole proprietor can
lose not only the business but his personal
property.
9
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.

10
A business district is a section of a town where
businesses are located.
11
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.

12
Health insurance is a fringe benefit. Sole
proprietors usually cannot afford to offer
their workers such benefits.
13
A sole proprietorship is the least-regulated form
of business in the United States.
14
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?