A sole proprietorship is the most recognized kind of small firm or business where the owners engage in business solely, with no shareholders or partners. The company, therefore, operates under the power of the individual firm owner and thus all the business’s liabilities, as well as assets, are in his or her name. The owner is therefore accountable and responsible for all the business issues, for instance, the brands bought by customers and any services offered to the clients. Examples of sole proprietors include electricians, plumbers, and carpenters. Selling a sole proprietorship varies from that of a separate firm or corporation. Under a sole proprietorship, a business owner can only sell the assets, as the entire business cannot be sold because everything falls under the owner’s name.
Under a sole proprietorship, the business owner offers a warranty to the customers. In case the business owner sells the business assets, the buyers are still entitled to the promises made to them by the business owner. The primary reason for this is because the firm liabilities exist in the owner’s name and this cannot be transferred to any other individual without the owner’s consent. Therefore, regardless of whether the sole proprietor sells the business assets or not, he or she is liable for any promises and debts that the business incurred when he or she was in charge. Additionally, business owners are also responsible for any future liabilities that might arise from the business operations during the time he or she was in management.
In conclusion, most business owners sell their businesses expecting to escape future liabilities and obligations. However, the sole proprietorship’s unique characteristics inhibit it from ending the story by selling the company. The sole proprietor is therefore responsible for the many liabilities and obligations that might be encountered after the sale, for instance, financial liabilities and continued employment.