Sole-proprietorship Understood in Detail
“Sole-proprietorship is as old as our civilization and history bears testimony to the fact that business first started with this form of organization. ”
Of all the business organizations sole-proprietorship is the oldest and most frequently used form of business organization. It is as old as our civilization and history bears testimony to the fact that business first started with this form of organization.With the development of science and technology the needs of business increased and new forms of organizations developed, but this form has been able to maintain its craze up to the present. This organization is also known as sole-proprietorship, individual proprietorship and single entrepreneurship.
In a sole-trade organization, an individual is at the helm of affairs. He makes all the investment, shares all the risks, takes all profits and manages the business himself. A sole trader mainly depends upon his own resources, so the business tends to be a small one.
Such a business is normally run with the help of family members but the sole trader may also employ persons to look after the day-to-day activities of the business. As far as his liability is concerned, it is unlimited.
The sole-trader moulds the faith of the concern. It is the confidence and competence of the proprietor that determine the future of his business. His powers are unlimited and his decisions are final.
He is, in fact, the sole organizer, manager and controller of the business. The sole trader must be a person competent to enter into a contract. The business to be carried on by him should also be allowed by law. It’s not that a sole trader is free to choose any kind of business without caring for the society and business ethics.
In some instances, a person may be expected to take a license from competent authorities before starting a sole-proprietorship. Normally no other legal formality is essential for starting such a business.
However, as no business type is perfect, sole-proprietorship also has some disadvantages. The foremost being that this type of business is a one-man show and the capacity of the concerned person is certainly limited.
So, such a person may not be able to deal with every situation competently and there are many chances of serious mistakes being committed by him. In such a system the person ought to develop a precautious approach towards his business as every kind of responsibility and accountability is to fall upon him only.
Author - DeeKay
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