Sample Essay on Sole proprietorship-bakery


There the legal system of various countries. The business types that exist today vary are many types of business organization entities defined in by jurisdiction, and these businesses are recognized based on their ownership models. These include sole proprietorship, partnership, cooperatives, limited liability companies and corporations (Scherer and Guido 899-931).With a capital of $50,000, a bakery run under a sole proprietorship model of ownership would be the best choice.


It is easy to set up and least costly to run as opposed to other forms of ownership since no filing of forms or payment is needed for the business to start operations. And there are no specific operational rules. Under this model, it will be easy to control the operations as the owner is the sole decision maker. Besides the tax filling are easy to put in as the business income/loss is added to the owner’s income on personal tax return. This attracts the lowest form of taxes. Since income/loss from this business is included on the personal tax return, one could use any losses in business in the offsetting of personal income from other sources like salary. And on hiring of employees, the owner can hire family members without having to formally declare them as employees (Scherer and Guido 899-931).


The biggest disadvantage of this mode of business is that personal finances and those of the business are one and the same. In the case of business bankruptcy, one has first to file for personal bankruptcy. Personal assets are not shielded from liabilities in case of business debts and the case of some negligence arising from the business; the owner cannot escape being sued on behalf of the business. In the taxation, the proprietor is required to pay income tax on the net income of the business and lastly the business can suffer from lack of continuity if the owner is incapacitated in one form or another (Scherer and Guido 899-931).

There are other forms of business as discussed bellow, but given the capital base and the requirements for starting some of them, the above-discussed type of business is still the best choice to take with such a capital and factors of ease of management. These other forms of business are as Partnership. This is a business co-owned by two or more persons, and all the profits are divided among the partners. There are two types of partnership. In partnerships, all the involved partners would have unlimited liabilities versus unlimited partnership (Scherer and Guido 899-931).

The other form is a corporation. This has a separate legal ownership from proprietors. The owner’s involvement in the company is often   limited inthe operations with limited liability. In Limited liability Company, the owners enjoy limited liability, and taxation can be done as a sole proprietorship, corporation and or partnership (Scherer and Guido 899-931).

The other form is cooperative. This is a business owned by different individuals which they operate for their mutual benefit. These people refer to themselves as members. Cooperatives can be unincorporated or incorporated. Examples are banks, housing cooperatives and credit unions (Scherer and Guido 899-931).


When making a decision on what structure of the business to adopt, a choice should be made on one that best suits the business needs knowing that there are advantages and disadvantages to every one of the structures. The business structure one takes determine: the licenses you require, how much tax you to be paid, whether the owner is considered an employee, or the owner of the business, potential personal liability, how much control one has over the business ongoing costs and volume of paperwork for the business. It is also important to note that one can change the business structure throughout the life of business. As the business grows and expands, one may decide to replace the business structure or to restructure.



Works cited

Scherer, Andreas Georg, and Guido Palazzo. “The new political role of business in a globalized world: A review of a new perspective on CSR and its implications for the firm, governance, and democracy.” Journal of management studies 48.4 (2011): 899-931.