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&quotGlobal Business Analysis&quot

Continuation of Global Business Analysis Paper

Sole proprietorship defines a businessstructure in which a person owns and manages the operations of theentity. A proprietorship is currently one of the most common businessstructures in the United States,especially for the small enterprises. In this type of corporatestructure, the owner of the company is responsible for all the assetsand the liabilities. However, like any other business structure, asole proprietorship has both advantages and disadvantages. Full andsmooth control of the entity as well as low start-up costs is some ofthe significantbenefits for a sole proprietorship. Limited ideas in the developmentof the business can be the main disadvantage since the owner of thefirm does not have associates to consult. The paper aims atdiscussing sole proprietorship as a business structure through thehighlight some of the advantages and disadvantages as well as thebenefits of work contracting.

Sole Proprietorship

A soleproprietorship is a business structure whereby the outlet is ownedand managed by a single person. Unlike the other forms of businesswhere a defined number of individuals have to merge to start thebusiness, in proprietorship, the ownership islimited to one person. The ownerof the firmhas the right to propertyof the all the assets and is also responsible for all the lossesrecorded by the company (Miller, 2015). Just like the other forms ofbusinesses, sole proprietors also have to comply with the licensingrequirements provided by law. Nevertheless, the legal proceduresinvolved in this kind of activityare less involving compared to that of the corporations. There areseveral advantages and disadvantages aligned to a soleproprietorship.

Advantages of Sole Proprietorship Business Structure

Firstly, thisstructure ensures total business control. Since the firm is owned andmanaged single-handedly, the owner is the one responsible for all theactions taken. Business industry involves making many decisions so asto ensure efficiency in running the business. Unlike in other formsof business where many people are involved in decision-making, a soleproprietor does not have to consult anyone (Hillman &ampLoewenstein, 2015). Independent decision making by sole proprietorsensures that there is no wasting of time keeping the business in theright pace.

Secondly,this structure is of a significant advantage since minimal legalprocesses are involved. Starting up of an enterprise be it a soleproprietorship or corporation will always demand that the due legalprocesses arefollowed. In the otherstructures, the involved parties have to sign a series of contractsmaking everything complicated. For a sole proprietorship, the processis easy since the only thing the owner has to do is registration ofbusiness. The simple legal procedure means that little capital isrequired to start the business.

Thirdly, insole proprietorship business structure, the owner keeps all theprofits by themselves. Accumulation of benefits is one of the mainreasons why people start up entities. Unlike the other forms ofbusiness where the accumulated profits areshared amongst the partners, herethe owners keep everything for themselves.

Disadvantages of Sole Proprietorship Business Structure

Minimalcapital is the first problem aligned to a sole proprietorship. Itis worth noting that no investoris ready to work with sole proprietors. Notably, investors andpartners are the primary sources of capital for any business. Sinceproprietorship does not involve any of these, they tend to facereduced capital challenges. Moreover, decision making for the soleproprietor is challenging as well. When managing a business alone,making decisions aloneis only advantageous if the choicesare simple. However, when dealing with complicated matters, one willalways need the opinion of the partners who are not available for thecase of proprietorship.

Secondly,settling of taxes seems difficult when it comes to proprietorship.Some business structures such as corporations have several benefitswhen it comes to paying taxes. For example, there are the healthinsurance benefits for the employees which mean that they will enjoyreduced costs. Unlike them, this advantage isnot intended for those who ownbusiness single-handedly. Moreover, proprietors incur a lot ofexpenses when it comes to settling of taxes especially if thebusiness name is different from the personal name. In this case, theowner will have to pay tax as self-employed as well as under thecompany name.

Strategic Advantage of Contracting Work

Workcontracting involves the process of entering into a legal and bindingcovenant. Liability in a company means that the corporation can sueor be suedin case of contract breach. Where the business facesa prosecution, they will have toface the legal charges, and this will involve paying money to settlethe damages caused. Most companies decide on entering into contractswith their employees, associates or even consumers toavoid such drawbacks. There aretwo main strategic advantages of work contracting.

Firstly,contracting of work reduces risks involved in the business. As noted,the company faces the risks of paying massive amounts of money sincethey are liable. However, when a contract existswith the consumers, they will lack to have legal ground in casesomething unusual happens. Consider this a company can decide thatthey will supply certain goods to the consumer but will not be liablein case an accident happens and the goods get damaged. When such acontract is present,the business will not be charged in the court of law since theyalready agreed on that with the consumer.

Secondly, contracts ensure that the companiessatisfy their clients since clarity isprovided. When signing acontract, both parties have to describe what they expect. Forexample, in a sole proprietorship, the client will have to definewhat the company has to provide explicitly.Such clarifications will ensure that the process is achieved fastersince they understand the exact thing they want. A well-definedprocess will mean that they will meet the customers’ expectationsquickly, thus profits maximization. Apple Inc., Allied Insurance,Dell, and Harris Corporation are some of the companies which haveapplied contracting work strategically.

Inconclusion, sole proprietorship entails management and ownership of abusiness enterprise alone. Unlike the other forms of business wherethe partners and associates are involved, here the owner of thecompany has the right to ownership of the all the assets, and is alsoresponsible for all the losses recorded by the business. The mainadvantage of initiating thisform of activity is that thedecision-making process is easy and there is no profit sharing.However, the structure faces challenges when it comes to settlementof taxes.


Hillman, R. W., &ampLoewenstein, M. J. (2015). ResearchHandbook on Partnerships, LLCs and Alternative Forms of BusinessOrganizations.Chicago: Edward Elgar Publishing.

Miller, R. L. (2015).Essentialsof the Legal Environment Today.New York: Cengage Learning.