Stocks Picks | Small Business And Sole Proprietorship

Many businesses are sole proprietorships, firms owned and operated by a single person. When a person decides to open an independent business, that person is then entirely responsible for its success or failure. Any profits go to the owner; any losses are his or her responsibility as well. If the losses prove to be greater than the investment, the individual is responsible for paying them, even if this depletes all personal assets.

One of the advantages of a sole proprietorship is that an owner can make decisions quickly and decisively without having to consult others. And an individual proprietor, by law, pays fewer taxes and at a lower rates than does a corporation.

There are disadvantages to this form of business organization, however. A sole proprietorship ends with the incapacity or death of the owner. A person who may then become the operator can inherit the assets, but legally the business dies with its owner. Also, since it is dependent upon the amount of money the owner has saved or can borrow, usually it does not develop into a large-scale enterprise.

In spite of its limitations, the sole proprietorship is well adapted to many kinds of small businesses and suits the temperament of many persons who like to exercise initiative and be their own bosses. Some of the economic contributions of small business are, a small business is often the starting point for developing a new product or service. One person tries out an idea. If it is successful, the business grows, or a larger firm may buy the product.

Small business can give an individual a chance to gain experience, which the person may use later on a larger scale. Small businesses are particularly well suited for meeting specialized local needs.

Artisans can provide individualized products fro customers who have grown weary of mass produced goods. Small businesses provide service where knowing ones customers is important. Sole proprietors are reassuring to customers who believe an individual who is accountable will do a good job.

Small businesses often grow into larger ones, adding to the economic vitality of the nation. Small business advocates contend that 55 percent of American technical innovation comes from small and medium size businesses. Certainly many of the creative innovators in the American computer industry, including those who built successful companies in what is now known as Silicon valley, California, started out as tinkerers working on hand-assembled machines in their garages. They have become part of American business lore. By any measurement, small businesses are an important part of the ferment, the creativity, and the competition that provide new strength to the American economy.

Of course, it is true that small businesses often fail. But in the United States failure of a small business venture does not carry with it the social stigma or opprobrium for the failed entrepreneur that it does in some countries. Often, failure of a small business venture turns out to be a valuable learning experience for the entrepreneur, who may be more successful the second or third time. Unsuccessful attempts to start a business become part of the larger process of sorting out the market and making it more efficient, according to small business experts.

By: Elton John

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John Elton owns and operates a Best Penny Stocks Picks website to help other investors with their stock decisions. He also operates a Home Based Business earn money online site to help entrepreneurs gain experience and wealth.

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