Sole Proprietorships Overview

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What is a sole proprietorship?

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A business owned and usually operated by one person. It is easy to start and has both advantages and disadvantages.

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What percentage of businesses in the U.S. are sole proprietorships?

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About 72% of all businesses, or approximately 26.4 million.

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What percentage of total sales do sole proprietorships account for in the U.S.?

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Only about 4% of total sales, or around $1.5 trillion.

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What are common industries for sole proprietorships?

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Retail, services, and farming (e.g., small clothing shops, local appliance repair shops, family farms).

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What are the advantages of sole proprietorships?

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1. Easy to start
2. Full control
3. Minimal formalities
4. Low cost
5. Tax simplicity
6. Local, fast decision-making

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What is an example of a sole proprietorship in Bethel?

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A person starts a small fur brush repair shop, uses their own tools, decides prices, and keeps all earnings with minimal paperwork.

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What are the disadvantages of sole proprietorships?

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1. Limited money to borrow
2. Limited management skills
3. Hard to hire and keep workers
4. Personal risk
5. Growth limits

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What is an example of a disadvantage in Bethel?

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A store owner needs more gear for summer tourism but struggles to borrow money and handle all the tasks alone.

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When should a sole proprietor consider moving beyond this business form?

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When growth is needed or more capital is required.

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What are the options for moving beyond a sole proprietorship?

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1. Forming a partnership (sharing ownership and responsibilities).
2. Incorporating (becoming a corporation or LLC to limit personal liability and attract investors).