Understanding Sole Proprietorships: Advantages, Disadvantages, - Course Sidekick (2024)

Lesson 5.1Sole Proprietorships Key Terms sole proprietorship business organization business license zoning laws liability fringe benefits Academic Vocabulary Entrepreneur:a person who decides how to combine resources to create goods and services Lesson Objectives 1.Explainthe characteristics of a sole proprietorship. 2.Analyzethe advantages of a sole proprietorship. 3.Analyzethe disadvantages of a sole proprietorship. 4.Analyzethe economic rights and responsibilities involved in starting a small business. The Role of Sole Proprietorships:Text 1.Draw InferencesWhy do you think more than 70 percent of all businesses are organized as sole proprietorships? There is only one owner that earns all of the firm's profits, to be the only one that controls the entire business is appealing to many people.

2.Compare and ContrastHow might someone with an entrepreneurial spirit be different from someone who has worked for a single company for many years? People with entrepreneurial spirit are more willing to take risks than people who have worked at the same company for many years; they are willing to invest their own time and money into creating a new business. 3.Use Visual InformationLook at the circle graph that shows characteristics of a sole proprietorship. What amount do most sole proprietors report on their taxes? What does this tell you about the size of most sole proprietorships? Most sole proprietors report less that $25,000; relatively small businesses. Advantages of Sole Proprietorships:Text 4.Assess an ArgumentMaggie wants to name her artificial flower arrangement business using her name, "Maggie Lightner, Inc." Her friend Sally thinks she should name it "Forever Flower Designs." Think about the advantages of a sole proprietorship. Why might Maggie want to consider Sally's idea? Maggie's idea of a name for a business describes her business and using just her name does not tell people what she does.

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5.Draw ConclusionsWhy do you think zoning laws may prohibit some sole proprietors from operating businesses out of their homes? Some businesses might be disruptive to a residential area. 6.Assess an ArgumentA sole proprietor has the ability to set flexible business hours. Why is this an advantage over other types of businesses? Sole proprietors can adjust business hours to meet their personal needs. Disadvantages of Sole Proprietorships:Text 7.CategorizeUse the chart to classify advantages and disadvantages of sole proprietorships. - few regulations- earns all profits- working for yourself- total control- easiest to start up and end- buying property- little legal paperwork- least expensive to start - government aid available- zoning laws - lots of paperwork - work more hours - sole responsibility - responsible for all debits - unlimited personal liability - limited access to resources