Page 2 - Lesson Note 3

https://www.youtube.com/watch?v=529dhYgcqIM

MEANING OF SOLE PROPRIETORSHIP BUSINESS_______

Sole proprietorship means a business owned, financed and controlled by a single person who is
recipient of all profit and bearer of all risks. It is suitable in areas of personalized services like
beauty parlor, hair cutting saloon, small grocery shops and other retail shops.

FEATURES________

1. Single Ownership: it is wholly owned by one individual.

2. Control: the owner has full power of decision making.

3.No separate legal entity: legally there is no difference betweenbusiness andbusinessmen.

4. Unlimited liability: The liability of owner is unlimited.in case the assets of business are not
sufficient to meet its debts;the personal property of owner can be used for paying debts.

5. No legal formalities: not required to start, manage and dissolve suchbusiness organization.

6. Sole risk bearer and profit recipient: he bears the complete risk and there is no body to share
profits and loss to him.

MERITS/ADVANTAGES: https://www.youtube.com/watch?v=2x0lB1bPDJs

1. Easy to start and close: It can be easily started and closed without any legal formalities.
2. Quick decision making: As sole trader is not requir4ed to consult or inform anybody about
his decision.
3. Sense of accomplishment: There is a sense of personal satisfaction, because he is not
depended to others for managing his business.
4. No legal formalities: this business is free from legal formalities to start, manage and
dissolve such business organization.
5. Profit recipient: as he bears all the risks of business, so there is no body to share profit
/loss to him.
6. Retention of Business secret: A sole trader can maintain his business secrets. Being the
sole proprietor, he is not expected to share his trade secrets with anybody else.so he can
maintain secrecy from his competitors.