Читать книгу Start & Run a Restaurant Business - Brian Cooper - Страница 9

Some disadvantages of operating as a sole proprietor include the following:

• Possession of debts. Any debts incurred by the business are regarded as the personal debts of the sole proprietor.

• Liability. As a sole proprietor, your liability for the debts and obligations of your business is unlimited. Furthermore, an unsatisfied business creditor can resort to your personal assets if you cannot pay your business debts.

• Potential tax problems. A sole proprietorship is not eligible for certain tax breaks available to corporations. This is likely to become an issue as your restaurant becomes more and more profitable.

• Limited financing options. Banks and other lending institutions may be less enthusiastic about providing loans to sole proprietors than to partnerships and corporations. You will be required to put up personal assets worth almost equal to the value of the loan, as well as personally guarantee any amount borrowed.

Due to the volatility of the restaurant industry, it is difficult to operate a restaurant as a sole proprietorship unless you have a large inheritance or have recently won a lottery. Nonetheless, once you have prepared your financial plan (see Chapter 4, “The Financial Plan”) and carefully researched your personal capacity to operate without partners, you may be able to operate at least at the start as a sole proprietor. We highly recommend it.

Often, individuals believe that franchise opportunities are similar to sole proprietorships. However, as you will see in section 4., they can be looked on more truly as a partnership, with all the challenges that go along with that business structure.