Sole Proprietorships - Advantages of Sole Proprietorships and Disadvantages of Sole Proprietorships
What are the Characteristics of a Sole Proprietorship? What are the Pros and Cons of a Sole Proprietorship?
A sole proprietorship is a business run by one person who makes all decisions, although the owner may hire employees. A sole proprietor is personally entitled to all profits and is liable for any debts incurred by the business.
Advantages of Setting Up a Sole Proprietorship
A sole proprietorship is the simplest and most flexible business structure.
A sole proprietor has full control and full decision-making authority over policy, profits and capital investment.
Closing a business is easy.
Business profits will be taxed at the sole proprietor's marginal tax rate, which may be lower than the corporation (limited company) tax rate. Also, business losses can be off set against other income of the proprietor (see topic - Taxation for more details on profits tax).
Disadvantages of starting a sole proprietorship
Sole proprietors take risks that can lead to personal bankruptcy.
Death or prolonged illness of the sole proprietor will bring about the end of the business.
Due to the limitations of a one-person business, a sole proprietor may not be able to raise additional capital from outside sources to expand the business.
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https://www.clic.org.hk/en/topics/businessAndCommerce/setting_up_business_in_Hong_Kong/types_of_business_organisation/q1#:~:text=The%20sole%20proprietor%20has%20total,(limited%20company)%20tax%20rate.