What are the advantages of a sole proprietorship?
Individual proprietorship is the most original and classic form in the enterprise system sequence, and it is also the main enterprise organization form of private enterprises.
Its main advantages are: 1) The ownership, control, management and income rights of enterprise assets are highly unified. This is conducive to keeping the secrets related to the business development of the enterprise and to the development of the owner's personal entrepreneurial spirit. 2) Business owners are responsible for their own profits and losses, and assume unlimited liability for the debts of the enterprise, which becomes a tough budget constraint. The quality of enterprise management is closely related to the owner's personal economic interests and even his life. Therefore, the owners will try their best to run the enterprise well. 3) The laws and regulations outside the enterprise have little restriction on the management, decision-making, entry and exit, establishment and bankruptcy of the enterprise.
Second, the shortcomings of wholly-owned enterprises
Although a sole proprietorship has the advantages of the past, it also has obvious disadvantages:
1) It is difficult to raise a lot of money. Because a person's funds are limited after all, it is more difficult to borrow money in his own name. Therefore, wholly-owned enterprises restrict the expansion and large-scale operation of enterprises. 2) Investors are very risky. The unlimited liability of enterprise owners to enterprises not only hardens the budget constraints of enterprises, but also brings the problem that owners take too much risks, thus limiting the investment activities of owners in high-risk departments or fields. This is extremely unfavorable to the formation and development of emerging industries. 3) The persistence of the enterprise is poor. The highly unified property right structure of enterprise ownership and management rights, although making enterprises have full autonomy, also means that enterprises are natural person enterprises. The illness and death of the owner and the lack of knowledge and ability of individuals and family members may lead to the bankruptcy of the enterprise. 4) The basic relationship within an enterprise is the employment-labor relationship, and the differences in interests and goals between employers and employees constitute the potential danger of organizational efficiency within the enterprise.
Three. Similarities between sole proprietorship enterprises and individual industrial and commercial households
First, the investors are basically the same. The investors of both can only be natural persons (citizens), not legal persons or other organizations.
Second, sole proprietorship enterprises and individual industrial and commercial households implement the declaration system for the invested assets, and do not need to go through a statutory capital verification institution for capital verification. Because both of them bear unlimited responsibilities, they do not emphasize the actual payment of physical objects, industrial property rights, non-patented technologies and land use rights as capital contributions. Third, both of them bear the same form of legal liability, and they must bear unlimited liability with personal or family property. If divided by the amount of capital contribution, individual industrial and commercial households can be divided into two forms: individual operation and family operation; And sole proprietorship enterprises can also be divided into sole proprietorship enterprises funded by personal property and sole proprietorship enterprises funded by family property. In terms of liability, a sole proprietorship enterprise or individual industrial and commercial household funded by personal property shall bear unlimited liability with personal property. A sole proprietorship enterprise or individual industrial and commercial household funded by family property shall bear unlimited liability with family property. Fourth, sole proprietorship enterprises and individual industrial and commercial households, as economic organizations, must have the necessary funds, places, employees and production and operation conditions. This is also a necessary condition for individual industrial and commercial households and sole proprietorship enterprises to enter the market as market subjects. In addition, sole proprietorship enterprises and individual industrial and commercial households have many similarities in trademark users and advertising strategies.
To sum up, sole proprietorship enterprises have advantages and disadvantages, and have certain similarities with individual industrial and commercial households. The two investors are basically the same and can only be natural persons; Both of them implement a declaration system for invested assets without capital verification; Both bear the same form of legal liability, and individuals or families bear unlimited liability.