Sole proprietorships can be a very lucrative business structure for the right kind of business owner. If you want to learn more about how big your sole proprietorship can really be, then this is the article for you.
A sole proprietorship is a type of business structure that is legally jointly to its owner. This means two things, (1) as an owner, the profits of your sole proprietorship is entirely yours; and (2) you will be held personally responsible for debt and financial losses incurred by your sole proprietorship. Yet, if you are a shrewd and dedicated owner of a sole proprietorship you can conduct and develop your business rather aggressively, if you have the financial capital and resources, into a well-established, profitable business. In this article, we will answer a few questions about what you need to know about sole proprietorships and how successful they can be.
What are the legal requirements and obligations of a sole proprietorship?
As a sole proprietor, you will conduct business in your own name, that includes signing legal documents in your own name, and write cheques and receive payments in your own name and also open business bank accounts in your own name. You will also have legal obligations as a sole proprietor. Because you are not considered legally separate from your sole proprietorship, you will be held legally liable in the event your business is sued or you default on paying your business debts. You may also be required to put up your personal possessions and assets as collateral when you are first starting out and have little by means of business assets which you can use as collateral. However the up-side is, if you are successful in managing and growing your business, you will be entitled to 100% of the profits of your sole proprietorship, which in turn, can make you very wealthy and reinvested into your business.
Are there limitations to growing your sole proprietorship?
There are no real “limitations” to growing your sole proprietorship. If you put in the hard work and stay in compliance with state and federal business laws with regards to your business licences and permits, you can most definitely develop your business until it becomes financially self-sufficient and profitable. There are a few things you can do to grow your business even faster, and that is by attracting outside financial investors for a financial boost into your business or bringing in a partner or employees to speed up the workload and output of your business. Other things you can also focus on is marketing your business on various platforms and establishing good customer relationships with your clients. These are only a few things you can do but these are the things that really come into play if you want to develop your sole proprietorship into profitability.
Is it possible for a sole proprietorship to be a Fortune 500 company?
Technically, the Fortune 500 companies is a list of the 500 biggest corporations in the US, and since a sole proprietorship is not exactly a formal corporation, a sole proprietorship cannot be included in the list. Sole proprietorships are however capable of the potential growth we see in Fortune 500 companies. It is possible for sole proprietorships, with dedicated owners, sufficient financing and good market relations to grow to the extent of Fortune 500 companies. However, with the risk of personal unlimited liability we do not see many sole proprietorships grow to the extent of Fortune 500 companies before they incorporate into one of the formal business structures.
Sole proprietorships are one of the most popular business structures, with more than 20 million in the US alone. If are looking to start your own sole proprietorship, be sure to visit TRUiC’s site, they will assist you with all your inquiries and show you exactly how to start conducting business as a sole proprietor today already.