Reading: What is a Sole Proprietorship

Business Management for Every Enterprise

Unit 5

What is a Sole Proprietorship

Sole Proprietorship

An unincorporated business owned by one person who often the owner also acts as manager. This form of business organization is common in small retail stores, service businesses, and professional practices in law, accounting, and medicine.

A sole proprietorship is a very common form of business in a free market economy.   

Feature of Sole Proprietorship 

Individual ownership

Sole management

Unlimited liability

Freedom in selection of business

Secrecy

No separate legal entity of the business 

Undivided risk

Suitable for some special forms of business

Merits of Sole Proprietorship 

Quick decision 

Benefit of secrecy

Direct motivation

Personal control

Easy information

Limitations of Sole Proprietorship

Limited source of capital

Unstable existence

Unlimited liability

Unbalanced management