Should a Person Choose Sole Proprietorship or Partnership

Should a Person Choose Sole Proprietorship or Partnership

When starting a business, a person has to decide among some options, which could totally depend upon the person. Deciding the type of approach can change each aspect within a business, because two people can have different opinions, even about the simple things.

It is the first step that must be addressed by a person. Most people tend to think that they can follow any approach, and it would not have any effect on their products or services generated from the business.

Businesses are conducted in two common ways- Sole Proprietorship and Partnership. They both have their benefits and limitations, that need to be analyzed before taking this vital decision. Even for students in colleges, assignments related to this can be solved using Assignment Help websites, where expert writers can complete the work in no time.

Sole Proprietorship

Advantages

  • It means only a single person is the owner of a business, that has all the control of that business. They can take any decision that they want, without depending upon any other person. It has been proven scientifically that a person takes better decisions, when they do not depend upon others.
  • They do not have to take any certificate from the government, which results in few hassles for the business owner. It can help them to actually focus on the quality of their service or product. This also helps them to avoid regular renewal of certificates, and certificates are not given for free, which helps them to save costs.
  • These businesses do not have to give any report to the government about their records, which helps to keep the company’s personal details a secret. Keeping the strategies and records a secret can help to gain an edge over the competitors, and give better chance of innovation.
  • In this business type, the owner doesn’t have to report to any other person, because they perform the role of a manager, record keeper, supervisor. It gives immense freedom and takes away the stress of meeting the deadlines.

Disadvantages

  • A major problem that these business owners encounter is that they have limited money, which can become a problem, if a person decides to add some functionality or hire people for their business. Even worse, banks feel that the person is not credible and would not give them loan.
  • This is a risk that is actually quite serious, because when a person starts this type of business, they have to keep their personal belongings at stake. If, under any circumstance, a business fails, it can result in the complete loss of belongings.
  • This business type can actually be more stressful because a single person has to deal with all the aspects alone. They have to gain knowledge about them, which can be a tiring task, because a person cannot have specialization in all the fields.
  • If the sole proprietor gets injured or in worst case, they die, the business comes to an end. All their secrets about other businesses and services die with them, with no way to recover them.

Partnership

               Advantages

  • The biggest advantage of partnership is that when two or more people are involved in a business, more ideas can be generated, which would automatically benefit the business. One person can get stuck at a problem, but the other person might have a solution for it, which can save tremendous time.
  • The costs that would be required to start a business would be low, because it would be divided among the partners. They would avoid loans, because all the functionality they would want in a business would get fulfilled by the existing finance.
  • When this type of business would approach a bank for loan or any other person for some sort of help, that person or organization would trust them more, considering that some people already trusted them with the business idea.
  • A better network could be created, because more people means better approach. When in some sort of problem, some high-ranked person could be called to solve the problem and assist the business in taking future decisions.

Disadvantages

  • In this business type, when a decision is taken by a person, all the members have to deal with the consequences, either good or bad. It limits the creativity of a person and can cause them to have problems with each other.
  • All the decisions that have to be taken must be mutual, which ends up consuming lots of time. It can even lead to conflicts, when people do not agree with each other and can affect the business negatively.
  • If some person decides to withdraw themselves from the business, they have to go through a lot of processes. Not only that, the workload increases because the employees are reduced. Other members have to work hard to fill the gap of that person, by acquiring their skills, which would help them to take their business back to great heights.
  • When setting up partnership business, a lot of formalities and paperwork is there, which results in wasting the precious time, that could be contributed to actual process of improving the product or service.

Before a person decides about the approach, these points are essential to be considered or the outcome can completely vary from the expected output, which would lead to disappointment and depression. For students that would want to know more about these business practices, they can rely on Assignment Help Sydney to solve their problem, and give them in-depth knowledge about the topics. It is not difficult to start a business, but it sure is a complicated task. But if a person has done enough preparation, they can be sure that their business would bring some positive change in their and the people’s lives.

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