Chapter 5 Business and Labor Test (Sole Proprietorship)

Sole Proprietorship

A business owned by one person

Sole Proprietorship is the most common

Business organization in the United States. Accounts for 70 percent of businesses

How does a lack of financial resources for fringe benefits affect a sole proprietor's ability to run a business?

It makes it difficult for the owner to attract good employees

liability

Legal obligation to pay debts

Distinguish Which is a disadvantage of sole proprietorships?

Limited access to resources

Cite Evidence Why is it easy to start a sole proprietorship?

Sole proprietors do not need to file a lot of paperwork to start a business.

Identify Which statement about sole proprietorships is true

Sole proprietorships are the most common form of business organization in the United States.

Which best describes a sole proprietorship?

a business owned by an individual

Which advantage of a sole proprietorship could also be a disadvantage?

a sole proprietor has full control

Which of the following businesses would most likely be subject to laws that regulate the disposal of dangerous chemicals?

an auto repair shop

business organization

an establishment formed to carry on commercial enterprise

business license

authorization to start a business issued by the local government

Advantages of Sole Proprietorship

ease of formation, retention of control, pride of ownership, retention of profits, possible tax advantage

zoning laws

laws in a city or town that designate certain areas, or zones, for residential and business use

fringe benefits

payments to employees other than wages or salary (health insurance, vacations, retirement pay)

Why is liability the biggest disadvantage of a sole proprietorship?

the owner could lose personal property if the business fails

Disadvantages of Sole Proprietorship

unlimited personal liability, lack of continuity, lack of money, limited management skills, difficulty in hiring employees