Mainly, tere are four business forms of doing business including sole proprietorship, crporations, prtnerships, ad limited liability companies. Ech business form of doing business has its legal and ethical aspects of management. I should be noted that while most of these aspects may be unique to the specific business forms, tere are some aspects that are overlapping between different business forms of doing business (Madura, 2007). Te first business form of doing business is sole proprietorship. Sle proprietorship is the form of doing business where a person owns business’ assets and enjoys all the profits, a well as being liable for all the business’ debts and other liabilities.
Te business owner does not incorporate or establish a limited liability company but instead run his business in his own name (Jennings, 2012). Nmerous existing data indicate that sole proprietorships are the most common of all forms of doing business. Tis can be attributed to the fact that it is simple to start or form and operate, i addition to enjoying management flexibility. Aso, i is most common because subject to fewer taxes and fewer legal controls.
Abusiness that has been organized as a sole proprietorship is considered not to be separate from its owner (Mongalo, Lmina and Kader, 2004). I can be organized with merely a different name than with which the owner represents himself with to the public. Te fact, hwever, rmains that the business and its owner are inseparable. De to the nature of the relationship of this form of business, asole proprietorship is a pass-through entity where all expenses and income pass-through to, is as those of personal return of the owner.
I an event of loss, te owner will enjoy a deduction aimed at offsetting personal income. O the other hand, i the business makes a profit, is owner is responsible for taxes due (Pride, Hghes, ad Kapoor, 2011). Sle proprietorship has a number of advantages and disadvantages. Snce it has fewer legal requirements, i is not only easy to form, bt also to operate. I is more affordable because in most cases there are no legal documents that are to be Oten, al that one has to do while forming a sole proprietorship is to obtain a business license and start operations (Halbert and Ingulli, 2009).
Aditionally, sle proprietorship has the advantage of simplicity as it is less complex in formation. ..
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