By definition, a sole proprietorship identifies a single person who is handling all the business operations. This is a commonly found type of business ownership. And the sole proprietor is a natural man. He or she is not a legal entity or person. Also, the sole proprietor owns everything about the business. This is one of the reasons why sole proprietorships are famous around the world.A single person will own any profit generated by the business. Also, these are entrepreneurs who don’t share any legal entities. In fact, to launch a sole proprietorship business, you don’t have to register or even be incorporated. Thus, this is one of the simplest forms of business you can think of.
Anyone interested in launching a medium- or small-scale business would find the concept of this useful.
Just like every other type of business, a sole proprietorship comes with many impressive features. Here are a few important features to focus on:
There are three common types of sole proprietorships. The concept discussed so far focuses on self-employed business owners. These are professionals who engage in business or trade with the intention of making money. The venture can be a full-time or part-time source of income. This type of sole proprietorship doesn’t have any contracts with any stakeholder or client.
Another common type of sole proprietorship would be independent contractors. Self-employed business owners comprise this group. Yet, they function more like employees. Bigger brands hire an independent contractor.They perform specific tasks, but their pay does not have taxes withheld.Also, the independent contractor will not be subject to benefits like insurance coverage. Meanwhile, the perks of being an independent contractor are inspiring. You will have the freedom to take up or even decline assignments. This is an option traditional employees don’t have.
The last type of sole proprietorship would be a franchise. Most of the time, the franchisee will pay a franchisor for the use of brand items, ingredients, recipes, and more.The franchisee typically adheres to the terms and conditions set by the parent company.In this business model, royalties have to be paid. But if you are someone with zero business experience, this type of sole proprietorship will be useful.
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