Sole Proprietorship and its Characteristics

Sole proprietorship

Sole proprietorship

Sole proprietorship is a type of business organization in which an individual own the business. So he operates all the activities related to the business. Introduce his own capital, used in own skill and intelligence to run the business. He is responsible all risks and profit of the business.

Characteristics of Sole Proprietorship


The ownership of the business unit is by individual.


Finance is essential element to run the business which is provided by the owner. So he borrowed by friends and financial institution when he required.


In sole proprietorship the owner is the active manager of his business. So he delegate his power to his employee if the business is large.  Because the overall control of the business in his hand.

 No Legal Condition

No legal formalities to setup the sole proprietorship business. So this type of business starts any time and any where without legal formalities by individual.

Power of dissolving

Sole proprietor dissolves his business taking without any advice from anyone. He has power to end and start the business when he likes. Because he is the king of his business.


Sole proprietor run the business for his own interest. So he is alone responsible of all risk related to business.

Unlimited Liability

Liability of sole proprietor is unlimited because In the situation of bankruptcy he will bear lose in form of personal wealth.

Immediate decision

In sole proprietorship individual can take immediate action to hold the situation.

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