A sole proprietor is a business entity that is owned by only one person and assumes all risks personally. Company management is managed by the owner, sometimes even certain positions such as: the director, manager, or even the daily executive at the company is done by the owner.
Owner is the main actor in taking every policy and corporate decisions, as well as in the management of daily company activities, including the relationship with the parties concerned to the company. The sole proprietorship has a simple structure with sole proprietorship and has unlimited responsibility for all corporate debt. That is, if the company’s assets are not sufficient to pay its obligations will be used personal property to pay off the debts of the company. Meanwhile, the limitations or losses of individual companies, among others, in terms of:
- Capital – More difficult to obtain capital, which means that if an individual company wants to get additional capital or investment from banking is relatively difficult, especially for large numbers.
- Take a tender – Individual companies are relatively difficult to follow the tender, because it is difficult to meet the requirements of the completeness of documents and the amount of funds available.
- Responsibility – Owners of sole proprietors are responsible for the full debt of the company.
- Survival – Usually the survival or age of the company is relatively shorter. This is due to the difficulty of finding a replacement company owner if the owner dies, resulting in a vacuum that causes the survival of the company ends.
- Difficult to grow – Companies will be difficult to develop if using a private entity. This is because the difficulty in managing a business that is only in one hand. So if you want to enlarge the company must change the business entity first.
- Administration that is not well managed
In running the activities of private companies, often do not manage the administration properly, so that the documentation of each transaction is difficult to find. In fact, sometimes every transaction is not supported with documents that should be required.