In this session, we will be discussing what is a sole proprietorship, and also sole proprietorship definition, sole proprietorship meaning, features of sole proprietorship business, the types, importance, and advantages of sole proprietorship business, the disadvantages of sole proprietorship business, sole proprietorship examples.
What is a sole proprietorship?
Sole proprietorship businesses are those types of businesses, which anyone can be done. So, let’s discuss what a sole proprietorship business means, multiple authors’ definitions, and how anyone can do these types of business, and also sole proprietorship examples.
The meaning of sole proprietorship business is a business, in which one is owned by and operated by a single person.
These types of businesses are so simple to establish or take apart, due to a lack of government regulation.
Partnerships or corporations business has to need to create legal entities, but sole proprietorship businesses are those businesses, that do not have to create a separate legal entity from the owner.
Here are the sole proprietorship examples. Self-contractors and consultants, small businesses, freelancers, these all are those businesses, which are created by one person.
Here are defined sole proprietorships on the basis of popular writers’ definitions like Davidson, Gloss & Baker, B.O. Wheeler, Koontz, and Fulmer, Peter, and Plowman.
The sole proprietorship definition is defined by Davidson, as “A sole proprietor carries business for his profit bearing all risks”.
Defines by the sole proprietorship definition by Gloss & Baker, “A sole proprietorship is a business owned by one person and operated for his profit”.
According to Whereas B.O. Wheeler defines sole proprietorship definition, “The forms of business ownership which is owned and controlled by a single individual”.
The sole proprietorship definition is defined by Koontz and Fulmer, “A sole proprietorship is a business owned and controlled by one person”.
According to the sole proprietorship definition of Peter and Plowman, “Sole proprietorship is a business unit whose ownership and management are vested in one person.
The individual assumes all risks of loss or failure of the enterprise and receives all profits from its successful operation”.
In the session on sole proprietorship examples, we will also discuss the features of a sole proprietorship.
The features of a sole proprietorship business can be dedicated to the following points.
- Individual Ownership
- Risk Bearing
- Management, and Control
- Minimum Government Regulations
- Unlimited Liability
- No Sharing of Profits or Losses
According to the sole proprietorship business. these types of businesses are basically operated by a single person because these types of businesses are owned by single owners.
Because the owner has to provide the entire capital either from his private resources or through loans etc.
In those types of businesses, the owner of the sole proprieties is the sole beneficiary of profits. For example, in these types of businesses where there is a loss, the owner of the business has to bear it. Thus, the risks of the business are borne by the owner himself.
Management, and Control
Management and control of their business is the responsibility of the business owners. Because these types of businesses are owned by a single person.
The owner of the businesses may, however, employ a manager or other people for the purpose.
Minimum Government Regulations
Sole proprietorship businesses are those types of businesses where there is no authority for the government the interfere. However, they have to comply with the general laws and rules laid down by the government.
According to Unlimited Liability. Unlimited liability means that in case the firm incurs losses, the private property of the owner can also be utilized for meeting the business obligations to outside parties.
No Sharing of Profits or Losses
According to the sole proprietorship business. In business, if there is loss or profit then the proprietor of the business doesn’t have to share with anyone.
Because these types of businesses are owned by a single person. So, it clearly defines, the proprietor is responsible for the business’s success or failure.
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