Business Management Affairs - Coursework Example

A sole proprietorship brings the authority of running and controlling business activities to a single individual who can make important and minor decisions, control business environment and change policies where necessary. The accounting requirements and legal rules applicable on sole proprietors are less rigid and complex as compared to partnerships and companies. It is also considered to be on e of the cheapest forms of setting up a business (Gitman et al 2008). The advantages and disadvantages of sole proprietorship, however, need a deeper and keen observation to form a decision based on the examination of the three available options for us.

This recommendation would provide advantages and disadvantages of sole trader, Limited Liability Company and partnerships. It would further conclude as to which venture is better for the organization. Advantages of a Sole Trader As highlighted above, there are a number of benefits that sole proprietorship brings for the sole owner of the business. The first and the most rewarding benefit that this kind of business brings is the Controlling power that the owner receives. Sole trading maintains the highest level of autonomy in terms of running the business, choosing activities, methods and making autonomous decisions.

A sole proprietor enjoys the autonomy of running the business in a manner that he wishes or considers appropriate to do so. A decision made by sole proprietor is not challenged by others in normal circumstances. The interference of other parties is less likely to influence the decisions of a sole trader and hence, the level of independence is upheld when setting up a business as a sole trader (Mifflin 2004; Gitman et al 2008). The second most attractive effect of dealing as a sole trader is the ability and right to retain the whole profit earned by the business.

The sole traders are not required to distribute whole or part of their profits as required in the partnerships and companies. Another benefit that sole traders enjoy is the privacy of their data and business records. The companies are required to publicize their data and submit the annual reports to the companies’ house. The sole trader is free from such formalities required by the law or the stock market rules. It is also argued that sole proprietors are more responsible and specialist in terms of the nature and size of the business they are managing.

The argument is supported by the view that sole proprietors are individually responsible for the profits and losses their business makes. Hence, the owners try to exercise such systems and controls which assure the long-lasting survival and profits of the business. In that, sole traders are also quicker and more efficient in making decisions about their business. Their observation of the customer’s demands and expectations help them in making informed judgements of what may help in the long run success of their business.

They implement policies and change which aid the business’s aim (Toit et al 2007; DeFrancesco 2006). Disadvantages of Sole Trader The advantages are not enjoyed without the risks of certain disadvantages surrounding the sole trading. Sole responsibility for the liabilities and losses is one the basic disadvantage that sole traders face. The sole proprietorship, further, does not acquire the separate legal entity status which disables such