WHAT IS A SOLE PROPRIETORSHIP BUSINESS?
A sole proprietorship is a form of business ownership, also known as the sole trader, individual entrepreneurship or proprietorship, is a type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity
Sole Proprietorships are registered under the Business Names Act.
FEATURES OF A SOLE PROPRIETORSHIP BUSINESS
- Single ownership
A sole proprietorship is only owned by a single individual who bears all the risks and enjoys all the profits.
- Personal organization or common identity
The owner and the business itself are one single entity because the concern of the trader has no separate legal entity that is independent of the owner.
The owner has the authority of searching for capital by himself and from his own sources.
He can either get funds in form of a loan from a financial institution or borrow from friends or family.
- Unlimited liability
Sole proprietorship is not a separate legal therefore the proprietor is liable to pay the debts of his business even from the sale of his personal property in the even that resources of the business are not sufficient to cater for the debt.
- Profits and losses.
The profits in the business of the sole trader entirely belong to him and similarly, all the business losses and risks are accrued by him alone. He is responsible for the success or failure of the business.
Advantages of sole proprietorship
- Low start-up costs
- Total business control
- Easy start up process
- Easy decision making.