Sole Proprietorship may be defined as a form of a business unit set up, managed and controlled by one person with the sole objective of maximizing profit. It is a kind of business or an enterprise organized, owned and run by one man. The individual who owns the business is called the sole proprietor and he provides the capital himself. He takes all the decisions, controls the operations, bears all the risks and enjoys all the profits of the business. It is the oldest form of business organization with thousands of people operating it
The examples include shopkeepers, traders, small manufacturers, services of the professionals such as economists, accountants, doctors, etc.
Features of Sole-Proprietorship
- Life Span: This depends on the owner, the death of the owner or probably if the owner is insane can lead to the close down of the company
- Legal Entity: There is no separation between the owners and the business. Therefore, it is not a legal entity
- Objective: The Sole objective of a Sole-Proprietorship is to make profit in its business.
- Liability: A Sole- Proprietorship has unlimited liability
- Ownership: It is a one-man firm, that is, it is owned by a single individual
- Capital: The owner of the enterprise provides the capital which is often described as the risk capital
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