Owen Watt

Owen Watt is currently running a sole trade business called Brightspot, which is facing some burdens in the process of expanding limitations. Because of the fact that Owen is the only one person running the business, the capital capacity is certainly limited. The managerial capacity of the proprietor is also a limitation. Because the business scale remains under his personal supervision, he has to take all the decisions himself and be responsible for all the profits and losses.

In regard to business expansion, there are four alternatives: to scale up his business, Brightspot, as a sole trade concern and employ an assistant or to convert his business into a partnership, an LLC or a corporation. When it comes to adding partners or employing …show more content…
Indeed, he will need some form of capital to hire new employees, expand his facilities, or purchase new equipment and machinery. The admission of a new partner, in this case, is a perfect solution to his capital problem. In a sole trade company, the investments are limited to the resources of one person only. By adding one more person to the firm, more funding is combined, which will remain permanently in the business. When risks are distributed, temporary source of funding can also be raised through bank and interest liability of the business will increase as well.

As Owen is doing his business alone, he personally makes every decision and hence, be the final authority. The expansion of Brightspot might require a sharing of managerial responsibility. This can be solved by employing a servant but his role is still a limitation since final decisions have to be taken by the proprietor. Accordingly, the addition of a new partner is a more convenient choice in this …show more content…
Undoubtedly, as a partnership firm, business profit will be shared among two persons while in a sole proprietorship, it belongs only to the owner. Not to mention if a partnership firm is doing good, it is not tax-efficient. The option of employing a manager, on the other hand, does not provoke such concern. With that being said, the sharing of profits will certainly reduce the interest of the proprietor in his business.
A sole trader can no longer keep all of the business secrets to himself, now that it is his duty to share them with his partner. It would not be a concern until the relations between them are strained. The secrets then will have high possibility to be passed out. An assistant, in this case, is a safer choice since it is not his job to be involved in any critical process or information.
So many men, so many minds they say. When a partner is added to a business, decision-making process often becomes a time-consuming one. Decisions now have to be taken with consensus among partners in order to protect the business from being dissolved. In short, partnership requires more time and effort in taking a particular

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