Question

Assume you are just getting started your business , describe who owns your company. If there are multiple owners, describe each of them.

Answer 1

I started the business of a bakery shop. The assumption made is that I am the sole owner of the business.

This would mean that it is a sole proprietorship form of business. It has various advantages and disadvantages as listed below:

Advantages:

1) I would be the sole owner, so the decision making power would not be diluted. I would have the right to take decisions about expanding the business to other areas, about starting a new variety of cakes or about shutting down the business.

2) All the profits would belong to me: this would mean that all my efforts would be linked to the incentive or i would get it in form of profits. If I tend to devote more hours to work, then there would be more profits and better business.

3) No different identity: there would be no distinction between the company and me.Hence it would be easy to get the paperwork done or there would be less paperwork in case of tax filing etc.

Disadvantages:

1)All losses would be mine:If the business goes down, all the losses would be borne by me as there would be no distinction between the company and me.

2) Lack of Knowledge or skills: If i lack business skills or the skills to run a bakery, then it would be difficult to operate the business. This would require costs of hiring specialist which would impact my profits.

3)Resources: Since i would be the sole owner, the funds I would have might not always be sufficient . Loans and other such steps would be taken for the funds to be increased or it would limit the functions of the business.