If any form of business is common whether in rural villages or in metropolitan cities, that is sole proprietorship. It is the simplest and oldest form of business structures that is universally located in every corner of the world.
Definition: Sole proprietorship can be defined as business concern owned and operated by an individual.
A business venture can be owned either by one person individually or by many people jointly. When a single person owns and run a business, it is called as sole proprietorship while as when more than one person are involved in the ownership of a business enterprise, it refers to partnership.
A person who conducts business on his or her own and for himself or herself is known as sole proprietor or sole trader. He or she exclusively contributes the capital and skills to the business. Sole proprietor is also solely responsible for the business results ( gains or losses ). He or she enjoys all benefits and bears losses independently.
We can simply say that sole proprietorship is one man business who owns it, funds the same, manages and controls all the activities involved in his or her business. Sole proprietorship is also known as sole ownership or sole trading or from layman’s perspective one-man business.
Sole proprietorship is an easy to form business structure. There is no legal complication involved except that a license has to be taken from the local authority. No time, money and efforts are wasted during the commencement of proprietorship based enterprise.
In a sole proprietorship form of business, an owner can maintain absolute secrecy which in other forms is not practicable. Sole proprietor can change the course of business at any time as required by a particular situation.
The outstanding advantage of sole proprietorship is that there is no special Act which governs the business structure.