Sole Ownership.Or Sole Proprietorship or The Sole Trader, Individual Entrepreneurship

Sole Ownership.Or Sole Proprietorship or The Sole Trader, Individual Entrepreneurship
Sole Ownership.Or Sole Proprietorship or the sole trader, Individual Entrepreneurship Or Single Proprietorship 

INTRODUCTION: It is the oldest type of business ownership. When the mankind emerged out of the stone era started business in sole ownership. It provides for full ownership of profit, total control and rouses personal interest. It enjoys many benefits which other ownership cannot. Secrecy and ownership of full profit are main characteristics. However, it has some drawback like uncertain life, limited capital and difficulty in operations.

“It is type of business organization, which is owned by a single owner who is also referred to as sole proprietor”

1. OWNERSHIP OF ALL PROFIT:A sole proprietorship has only a single owner so there is no concept of distribution of profit and is wholly owned by him. On the other hand in company and partnership profits are distributed among owners.

2. EASE OF FORMATION: It is quite easy to form a business as sole proprietorship. Its formation doesn’t require any permission from the government. It does not incur any expenditure as is required in the formation of partnership and company. The formation of a company requires registration with the registrar of the government, drawing memorandum and articles of association.

3. EASE OF DISSOLUTION: It is quite easy to dissolve sole proprietorship. No much time or cost is required in bringing it to an end. But it is quite difficult to dissolve company. Its dissolution involves much time and money, Permission of shareholders the registrar, etc.

4. TAX SAVINGS: Sole proprietorship enjoys the advantage of saving various types of taxes. In this form of business income tax is imposed only once, but in the case of company the income tax is imposed twice. First on the company’s profit and then on the dividend of the shareholders.

5. PERSONAL INTEREST: In sole proprietorship the owner takes personal interest and offers maximum of his services and energy for growth of his business, because he is the single owner whole profit . 

6. MINIMUM LEGAL CONSTRAINTS: The Company and the partnership have to follow many laws, rules and regulations from which the sole proprietorship is exempted.

7. SECRECY: Secrecy is an important element of any business, which can easily be maintained here. But in the company secrecy of business and accounts cannot be maintained because all these affairs have to be printed for shareholders, bankers and General public.

8. CREDIT STANDING: This type of ownership enjoys credit standing because it has unlimited liability to pay off its debts. Therefore lender willingly offers credit to it.

9. FREEDOM OF ACTION: Sole proprietorship enjoys freedom of action. Its owner makes his own decision without any pressure from anywhere. This freedom saves the business from complications and waste of time.


1.UNLIMITED LIABILITY: The major disadvantage of sole proprietorship is unlimited liability. If the business assets are insufficient to discharge its liability the proprietor will have to resort to his personal property to make up any deficiency in meeting his business obligations.

2. DIFFICULTIES IN MANAGEMENT Since the form of business organization cannot afford the costly services of highly qualified personnel its management is in the hand of low or nonqualified personnel.

3. LIMITED SIZE: The business usually does not grow to a high level because of limited amount of capital and non – availability of highly qualified personnel.

4. LACK OF OPPORTUNITIES FOR EMPLOYEES: Sole proprietorship does not offer career opportunities to its employees because of its limitation on size. But the partnership and company offer such opportunities. 5. UNCERTAIN LIFE: The life of business depends on the efficiency or life of the single owner. If the owner is inefficient or dies the business will come to an end. But the company will not close down if its owners die.


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MANUFACTURING: The following manufacturing business can be undertaken by the sole proprietorship. Bakery, Publication, Printing, Cosmetics, Bookbinding, soap etc these manufacturing units can be run on small scale. WHOLESALING: In wholesaling the follow commodities maybe dealt in General store, chemist, Cloth, other types of shop keeping 

RETAILING: In retailing the following items are suitable:

* Bakery. * Readymade garments. * Bookstall. * Hawker ship. * General store. * Clothes. * Stationery. * Shop keeping etc. SERVICE:In service business The following activities can be carried out. * Barber shop * Consultant * Tuitions * Journalism * Repairing * Tourism * Construction service.