A sole proprietorship is a type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity.
A sole proprietorship usually does not have to be incorporated or registered.
Define the Features of Sole Proprietorship
Lack of legal formalities
Risk and Profit
No separate identity
Continuity
What are the Advantages of Sole Proprietorship?
A proprietor will have complete control of the entire business, this will facilitate quick decisions and freedom to do business according to their wishes
Law does not require a proprietorship to publish its financial accounts or any other such documents to any members of the public. This allows the business a great deal of confidentiality which is sometimes important in the business world
The owner derives maximum incentive from the business. He does not have to share any of his profits. So the work he puts into the business is completely reciprocated in incentives
Being your own boss is a great sense of satisfaction and achievement. You are answerable only to yourself and it is a great boost to your self-worth as well
What are the disadvantages of a sole proprietorship include?
Owners are subject to unlimited personal liability for the debts, losses and liabilities of the business.
Owners cannot raise capital by selling an interest in the business.
Sole proprietorships rarely survive the death or incapacity of their owners and so do not retain value.
