Benefits of a Sole Proprietorship Firm

There are many benefits of a sole proprietorship, but one should consider a few fundamental aspects before starting a business. This guide will quickly explain the advantages of a sole proprietorship.

If you run your business by yourself, you can save a lot of time and money by opting for a sole proprietorship instead of other business structures. For many, their business will always be a single-person entity, making a sole proprietorship by far the most ideal (and cheapest) option.

Remember, if you intend your business to expand over time, you can always start as a sole proprietorship in the beginning and then change business structures as you grow and start to make some hard-earned revenue.

What is a Sole Proprietorship Business?

A Sole proprietorship, also called sole trader or simply a proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts.

A sole proprietor has complete control over the revenue and operations of their business. However, the sole proprietor is also personally responsible for all debts, lawsuits, and taxes their company accrues. So, if their business is sued, personal assets like their home, credit score, and savings are unprotected.

What are the Features of Sole Proprietorship Business

Key Benefits of Sole Proprietorship Business

The following are some notable benefits offered by a Sole Proprietorship Business to its owners.

• A Unique Identity: Registration of your new business name makes it unique as nobody can bear such a business name subsequently.
• Certificate of Registration: After registering with CAC, You will get the Certificate Of Registration of Business Name and the Certified True Copy of the Application Form.
• It is Easier to Use: It is simpler to manage affairs when only one person is in charge. The person will make all the decisions and does not need to consider multiple opinions. In a proprietorship company, there is no need for approval or a board meeting.
• Seek Minimal Investment: Since the Sole Proprietorship model is a boon for low-cost business ideas, it is often chosen by small businesses like retail shop outlets, grocery retailers, and so on and so forth.
• The Only Beneficiary of the Profits: Among the big advantages of a sole proprietorship is a “not-skippable” benefit. It is that only sole proprietorships and single-person companies are eligible to be the sole beneficiaries of profits
• Bank Account Opening: The bank account for your business can bear your BUSINESS NAME, and these brands your business on a whole formal level.
• Tax Benefit: Sole proprietors in Nigeria don't pay any corporate income tax, since they are not legal entities. Instead, they only pay the PIT - Personal Income Tax (salary from employment or earnings as a sole trader).
• Incentives: When you register your business name, you stand a chance of growing your business through the various business incentives extended to Micro, Small, and Medium Enterprises (MSMEs) by the Federal Government.
• Ease: It is cheaper to register a Business Name for your new business than to incorporate a company. When a new business name is registered, it is not required to have formal meetings and rigid corporate governance meetings like companies that are incorporated.
• Complete Authority: Sole proprietorship business has complete privacy and does not report to anyone, submit an annual report, or publish audited statements for anybody like the Limited liability companies do.
• Business Trip to Other Country: Another great benefit of business registration is that you can easily obtain a visa and travel to any country for business purposes.

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