A Sole Proprietorship as the Most Appropriate Business Structure: ABC Company

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A Sole Proprietorship as the Most Appropriate Business Structure: ABC Company

The ABC company I am establishing is a sole proprietor, which is the most common and arguably the most universally fitting business structure among American companies. In this case, I, the head of the company, would be solely legally responsible for the decisions taken within it, as well as its assets and liabilities. Naturally, other stakeholders would be present in a company as well, but their administrative materials and relevant contracts would indicate one single person as head of the enterprise.

The two main reasons why I picked this structure are relatively democratic resource costs and creative freedom with business decisions. Although every company requires start-up capital and an entrepreneurs readiness to negate their own share of the profits for the first while, other alternatives would need additional investment. Such, a partnership would signify the need to research the industry for a potential partner and to make arrangements in approaching them (Kasahun, 2020).

Most importantly, however, a legal commercial partnership would lead to another persons opinion being crucial when deciding the future of an enterprise. Such actions as mergers, acquisitions,s or further partnerships would be impossible without a partners agreement. They would hold fifty percent of the shares, having considerable weight in any work-related discussions, including the running operations of the firm (Manenzhe, Zwane & Van Niekerk, 2020). Since the ability to fully control the managerial and creative director of the company is one of my priorities, sole propriety is perhaps the only form that can satisfy this criterion.

However, this structure involves several drawbacks, with sole responsibility for increasing my personal stakes in the firm being one of them. In case of financial difficulties and unfulfilled obligations, a court would be authorized to acquire my personal possessions to compensate the parties harmed (Villaluz & Hechanova, 2019). Although I am willing to take this risk, I believe it effectively highlights how with sole propriety an owner and a firm are seen as legally the same unit.

Reference

Kasahun, A. K. (2020). The Impact of Working Capital Management on Firms Profitability-Case of Selected Sole Proprietorship Manufacturing Firms in Adama City. IOSR Journal of Economics and Finance (IOSR-JEF), 11(1), 45-55. Web.

Manenzhe, T. D., Zwane, E. M., & Van Niekerk, J. (2020). Performance and sustainability of commercial cooperatives and sole proprietorships citrus farms in Mpumalanga province, South Africa. South African Journal of Agricultural Extension, 48(1), 70-83. Web.

Villaluz, V. C., & Hechanova, M. R. M. (2019). Ownership and leadership in building an innovation culture. Leadership & Organization Development Journal, 40(2), pp. 138-150. Web.

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