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What does proprietorship mean?
Proprietorship is a business that is owned and operated by an individual. Many people might have heard the term “sole proprietorship” but this phrase can be considered somewhat redundant because proprietorship, by its nature, has a singular connotation.
Proprietorship is one among many possible business models. All business models have positive and negative aspects; before choosing a particular business model, the aspiring entrepreneur'>entrepreneur should examine all of the options and make the decision that is best for him or her.
In the case of a proprietorship, the question of positive and negative may be largely subjective. The individual is responsible for all aspects of the business, including making decisions, operations, financial issues, management, and anything else that may arise. For people who enjoy these functions and are skilled in these areas, this is positive. For those who dread tasks like these or do not have all of the skills, this aspect of a proprietorship may make it less appealing as a business model. There is an additional consideration: with a proprietorship, the individual has liability for any problems that may arise, including lawsuits and tax concerns.
Given the aforementioned potential benefits and drawbacks of a proprietorship, this business model is more appropriate for some businesses than others. For example, a writing business might be considered appropriate with a proprietorship model because the person who does the writing could also handle financial matters, decision-making, and so on. A grocery store, on the other hand, might not be appropriate for a proprietorship model because there might be too many tasks for one person to handle. In the case of a grocery store, one person might handle finances, inventory, and employees, while another might be in charge of marketing and operations. Regardless of the type of business, the potential entrepreneur must examine all of these, as well as other relevant issues, prior to determining which business model might be the best fit.
State laws are another consideration when examining a proprietorship vis-à-vis other business models. Some states might have laws on the books which apply to overarching issues related to proprietorships, such as what types of businesses can be considered proprietorships and what types are more appropriate for other business models. In addition, some states might also have laws which govern particular aspects of business that apply to numerous business models. Examples include issues related to taxes, employment, the environment, and so on. People who are considering proprietorship as their business model of choice should research these issues fully prior to making a decision.
The proprietorship model is appropriate for some people in some situations. Only the person who is establishing the business can decide if a given model is right for him or her. Although an attorney, accountant, family members, and friends can offer helpful advice or counsel, none of them can make the final decision. The reason for this is simple: the person who is establishing the business and will be responsible for it must be fully comfortable with the chosen model. He or she has the greatest stake in it and its ultimate success or failure.