What does a sole proprietorship mean?

A wholly-owned enterprise refers to an economic unit that is completely controlled and managed by one person or one company. Such enterprises can make independent goals and business plans without compromising for the benefit of shareholders. Generally speaking, a sole proprietorship is often small in scale, because it is difficult for one person to bear too many responsibilities and risks. But it is more flexible, has high decision-making efficiency and adapts to market changes quickly.

A wholly-owned enterprise needs to bear all the responsibilities and risks, that is to say, if it encounters a business crisis, all the assets of a company will be threatened. Therefore, many people will choose to set up the legal form of enterprises as limited liability companies or other limited partnerships to protect personal assets. However, the advantages of sole proprietorship, such as flexibility and quick response, also make it popular in some industries, such as cultural creativity, design and consulting.

In many countries, wholly-owned enterprises enjoy certain preferential policies, which has become one of the reasons why many people choose to start their own businesses. For example, in the United States, wholly-owned enterprises can enjoy the benefits of tax reduction and some government subsidies and support. However, the growth of wholly-owned enterprises requires entrepreneurs to have strong management, innovation and market development capabilities, otherwise it is difficult for enterprises to survive in the fierce market competition.