Sole Proprietorship Discussed
“In a sole trade business there is no detached business existence. This is also what the courts agree to. ”
Sole proprietorship, as the name suggests, is a company or an organization that is established by a single person. This person called the proprietor of the company plans the draft of the venture and puts together various factors of production.He may well occupy other persons for assistance but the ultimate authority and liability is vested in him only. The entire earnings and losses are taken by a single individual i.e. the proprietor. In a sole trade company accountability is limitless.
There is a straight relationship between hard work and incentives. If the proprietor puts in more labour, he is sure to reap rich profits in all probability. Thus, he is motivated to enlarge his business actions and plans.
He however deters from entering any kind of speculative business because the peril involved in such a case is huge. He is in the habit of keeping all the business secrets to himself.
In this way he tends to discourage others from entering the same business because he never ever reveals the merits of his business. You, however, can often listen to him complaining about his business.
In a sole trade business there is no detached business existence. The business and the proprietor exist as one. This is also what the courts agree to. The business is dissolved only if the owner passes away or becomes bankrupt.
A sole trade business normally has a narrow area of operation. It is because of the inadequate resources and limited decision-making abilities of the sole proprietor. He can put together limited funds and is able to control only a relatively small business.
There is no definite law under which this business must be got registered. A joint stock company has to be integrated under company law act as prevalent in various countries but a sole trade business is not governed by any such act.
This business can be started and disbanded at the will of the owner without recourse to any legal or other such provision. However, it does not mean that a sole proprietor can establish any kind of business without regard to the social ethos or needs of a particular place.
Though governments cannot bring such businesses under the company law act, they are free to put stern restraints on a sole-proprietor in the interest of a set of people (minorities) or society in general.
Author - DeeKay
This article was created by DailyOjo staff. Report Spam/Abuse