A sole proprietorship is a unincorporated business owned by one individual, making it the simplest form of business to start and operate. There are over 20 million sole proprietorships operating in the United States and Canada, making it by far the most popular form of business ownership.
It is said sole proprietorship is one man in business for himself only.
Best feature of sole proprietorship is: “Sole Ownership”. Worst feature of sole proprietorship is: “Unlimited Liability”; all of the personal assets of the proprietor are at risk.
The key element of the sole proprietorship definition is that not at all like a joined business or an association there is no legitimate division between the business and the proprietor in a sole proprietorship - the business is thought to be an expansion of the proprietor and in that capacity the proprietor is by and by in charge of any obligations or liabilities brought about by the business.
The advantages of a sole proprietorship include:
- Owners can establish a sole proprietorship instantly, easily and inexpensively.
- Sole proprietorships carry little, if any, ongoing formalities.
- A sole proprietor need not pay unemployment tax on himself or herself (although he or she must pay unemployment tax on employees).
- Owners may freely mix business or personal assets.
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.
One of the considerable highlights of a sole proprietorship is the effortlessness of development. Minimal more than purchasing and offering merchandise or administrations is required. Actually, no formal documenting or occasion is required to frame a sole proprietorship; it is a status that emerges naturally from one's business movement.