The Importance of Sole Businesses in the Australian Economy

3 May 2012
Author: Alexandra

Sole businesses are businesses with only one owner. Many businessmen and women engage in this type of business because in here, there’s only one boss, no employees to deal with and all profit goes to only one person which is the owner.

Unlike in a corporation where you have to deal with so many other owners, in a sole business, you have the only power to make decisions. You also have the single right to operate your business and manage it in the way you know. However, as a sole owner of your business, you are also subjected to all of the responsibilities and obligations. When things go wrong you cannot ask somebody else to solve the problems for you. Instead, you only have yourself to blame and to depend on. As a sole trader, you are also entitled to pay tax in your own right as a fraction of your income and at individual rate of your income tax. But with proper management and wise decision making, you can expect that your business will never face such big problems.

The Australian Economy in the hands of Sole Businesses Owners

Sole businesses play a very important role in boosting up the Australian Economy. Statistics showed that sole businesses have granted jobs for over 5 Million people in Australia alone. Furthermore, it is evident that about 96% of the total income of the Australian economy comes from sole businesses.

The graph above shows the division of the labor force in the Australian economy as recorded by the Australian Bureau of Statistics or ABS. You could clearly denote that the smaller the number of employees is in the business, the more it contributes to the Australian economy. This could be explained by the importance of sole business in the Australian economy as enumerated below:

• Sole businesses contribute an approximate of 36% of industry value to the Australian industry. This is very much larger that what medium-sized and large businesses contribute to the industry.

• Sole businesses employ a big portion of the total population thus decreasing the unemployment rate of the country.

• Sole businesses contribute with the period of economic expansion

• The economy is made more lively and active through sole businesses by having productivity growth.

• The economy is continuously growing through sole businesses because of the creation of more innovative, efficient and competitive traders.