chapter 36 Sole proprietorships (1) - Chapter 36 Sole proprietorships and franchises Section 1 sole proprietorships A business that legally has no

chapter 36 Sole proprietorships (1) - Chapter 36 Sole...

This preview shows page 1 - 6 out of 24 pages.

Chapter 36 Sole proprietorships and franchises
Image of page 1
Section 1 sole proprietorships A business that legally has no separate existence from its owner. Income and losses are taxed on the individual's personal income tax return. . The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity . It simply refers to a person who owns the business and is personally responsible for its debts . A sole proprietorship can operate under the name of its owner or it can do business under a fictitious name, such as Nancy's Nail Salon. The fictitious name is simply a trade name--it does not create a legal entity separate from the sole proprietor owner. Thus any person does business without a creating a separate business organization has a sole proprietorship.
Image of page 2
Advantages of the sole proprietorship 1. The proprietor owns the entire business and receives all the profits. 2. Starting sole proprietorship is often easier and less costly that starting any other kind of business. 3. No or LESS documents to be field with the government to start sole proprietorship. 4. Its offer more flexibility than does a partnership or corporations. 5. Easy to make decision ( hire employment, take a vacation, type of business to conduct). 6. The proprietor can sell or transfer all or part of the business to another party at any time and does not need approval from anyone else. 7. A sole proprietor pays only personal income taxis. 8. It also allowed to establish certain retirement accounts that are tax-exempt until the funds are withdrawn.
Image of page 3
Disadvantages of the sole proprietorship 1. The proprietor alone bears the burden of any losses or liabilities incurred by the business enterprise. 2. Any lawsuit against the business or its employees can lead to unlimited personal liability for the owner. 3. Creditors can go after the owner’s personal assets to satisfy any business dents. 4. Lacking continuity on the death of the proprietor. 5. It usually based on individual funds, personal loan 6. Limited Expertise and Growth Potential 7. Limited ability to raise capital, Sole proprietorships are unable to sell interest or shares in the business as a means of raising money. They also lack the clout other forms of business structure carry, making it more difficult to obtain loans and other funding resources.
Image of page 4
Single Person Company under the Kuwaiti law The New Kuwaiti company law No. 25 of 2012, Chapter 7 (article 85- article 91) outlines the basic framework that governs the regulations of the one-man company. The Law also determined that such company is closer in nature to the limited liability company. The main advantage for establishing a One- Man Company is the limited responsibility of the owner for the company’s debts and losses to the extent of the company’s capital.
Image of page 5
Image of page 6

You've reached the end of your free preview.

Want to read all 24 pages?

  • Fall '14
  • marck
  • Business, Business Law, franchisee, franchisor

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture