4) Why do people prefer establishing a sole proprietorship but not partnership?

October 03, 2019

Sole trader is a business run and owned by one person. Partnership is a business owned and run by two to twenty people.  There are many advantages of sole trader like you’re the boss, you keep all the profits, start-up costs are low, you have maximum privacy, establishing and operating your business is simple, its easy to change your legal structure later if circumstance changes.  In the other hand As we know every person has their   own personality. When there are more than one person involve in a business as each   one of them has their own believes it will arise more conflicts and it may become hard to negotiate when mostly they are in equal in the business. In partnership more paper works has to be done. In a partnership there should be a partner’s agreements and more legal formalities than a sole trader. When comparing to sole trader partnership has more start-up costs. And changing legal structure will be complicated. Lack of stability even partners have a solid exit strategy in your partnership agreement, the change triggered by partners situation can cause instability in the business. If one partners wish to sell the company in the future. This could present difficulties if one partners isn’t interested in selling. This may be the some reason that people prefer sole trader more than partnership.

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