Sole Proprietorships
Subject: Management | Topics:

The oldest most common form of private business ownership in the world is the sole proprietorship .A sole proprietorship is a business owned and managed by one individual. That person may receive help from others in operating the business but is the only boss, the sole proprietor is the company.

Typically the sole proprietor owns a small service or retail operation. The sole owner, often aided by one on two employees, operates a small shop that frequently caters to a group of regular customers. The capital needed to start and  operate the business is normally provided by the owner through personal wealth or borrowed money.

        #The sole proprietor is usually an active manager, working in the shop every day. He or she controls the operations, supervises the employees and makes the decisions.

        #The managerial ability of the owner usually accounts for the success or failure of the business.

Advantages of Sole Proprietorship


      #Owner is the loss:- He does business whatever ways he wants.

      #Ease of starting :-  Sole proprietorship is the easiest way to start a business. It involves a minimum number of problems. There is hardly any Govt. Tax. However, local tax is given which is also very less.

        #Control:-  Sole control lies with the owner to take business decision. A owner he was the boss and made final decision.

        #Sole participation in profits and losses:-  All profits or losses in-curried by operating the deli. In states that permit one person to own a corporation ownership of profits and losses in such cases compares to that in the sole proprietorship.

        #Use of owner’ abilities:-The chance of personal losses motivated to devote time, energy and expertise to the deli’s operation and success depended largely on the efficient use of abilities.

        # Freedom of spending time:-The owner may decide long the stop would be kept open or how long he would spend time in the shop etc.

      # Tax breaks:- A major advantage of the proprietorship is that the business pays on income tax. A corporation pays taxes on profits its owners, the shareholders

also pay taxes on their dividends. A sole proprietor paid no taxes on business profits. Taxes paid an individual on all income earned from the deli.

       # Secrecy of profit:- Information on income expenses, hours worked and other items required by income tax regulations. Small ownership does not have to publicize the income statement.

       #Ease of dissolving:- The sole owner can dissolve the business at any time without any problem.

Disadvantages of sole proprietorship


If the sole proprietorship has only advantages, then people would not have gone for other types of businesses. That means sole proprietorship has also disadvantages as below.

       #Unlimited Responsibility:- For bringing success to the sole proprietorship business, one has try hard and it fails to generate sufficient profit, one has sell the own properties to pay loans if any.

        #Difficult in raising capitals:- Generally public do not want to give money to such businesses because single man may fail or die or plunder the whole money. Therefore, a sole proprietor has to have enough money to run such business which is rarely available.

          #Limitation in managerial ability:- Difficult to manage of business in terms of planning, organizing, controlling, marketing, financing etc even if the owner knows everything. Therefore, tiredness develop and hence limitation comes into play.

           #Lack of stability:- In case of death, sickness, labor strike etc the business comes to a stop or to be sold to somebody else.

        #Demands on time for other commitment:- A single owner can not spare for other jobs like games, taking children to school, traveling to other country etc.

          #Difficulty in keeping expert employees:- Expert employees leave the single proprietorship business for better opportunity jobs outside for enhanced career development.

 Sole Proprietorships

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