Sole Propritership

SOLE PROPRITERSHIP

INTRODUCTION  The most straight forward and simple type of business organization is individual or sole proprietorship. It is the first stage of business organization. The sale trader is an individual who invest his capital,employees,necessary labour ,directs the activities of the business and bears the risk of business.

DEFINATION  “It is a type of business unit where one person is solely responsible for providing the capital for bearing the risk of enterprise and for the management of the business.”

J.L.Hanson

FEATURES Common identity Capital Unlimited liability One man control Profit and loss Generally local business  Close contact with customer and employees  Single ownership business      

Common Identity

 A sole tradership business has no different legal entity independent of the owner.  The owner & the business concern are treated as one and the same.  It does not need registration.  The law does not contemplate special status to the business distinct from it’s proportion.

Capital

Capital is emplyed by the owner himself/herself from his/her personal resources. We may also borrow money from his friend and relative to fulfill the need of business is required.

Unlimited Liablities

 The proprietor’s liability for the debts of the business is unlimited .  The dues of the creditors can be recovered even from the personal property of the porprietor.  If the same cannot be recovered from the business asset.

One Man Control

 It is one man show and he is his own boss.  The sole trader makes all the decisions he procures materials, employees labour personally and directs manager and control the activities of the firm or business.  He has not to consult anybody for any decision.

Profit and Loss

If such business result into profit it wholly belongs to the the proprietor. Similarly all the business losses and risk are to be borne by him only.

Generally Local Business

 The small scale business are mostly situated in local areas.  The main reason behind that there is only one person in the business and he can not be every where at one time.  Thus, small scale business or sole trader business are always in local areas.

Close Contact with Customers & Employees

Due to small size of business it is possible for the sole trader to have close contact with his employees and customers. Contacts with employees result in better relation & avoidance of frictions.

Single Ownership Business

A sole trading concern is a one man show. It is owned by an individual. He owns all the property and assets of the firm, he provide required capital.

Guided By Mrs. Nazia Ansari Reference : Google Paresh Shah

By

Prepared

Jigar Kundalia F.Y. B.B.A.