Sole Proprietorship Business : Meaning, Information, Advantages, Disadvantages

Real estate activities: Importance, advantages and disadvantages, trial

Private property, i.e.

A business run by one person is called a sole proprietorship. He or she is the sole owner of the company and is usually responsible for its management and administration. He may have under his command one or more persons called employees of the company. A sole proprietorship is a form of business where the sole owner of the business is both the sole risk taker and the sole beneficiary. The singular means any, and the word owner means possessor. A sole proprietorship is also known as a one-man business.

In a sole proprietorship, the owner and the business are listed as separate entities in the books. However, under the Indian Income Tax Act, sole proprietorship and partnership are treated as a single entity. The assets of the company are owned by the owner who contributes them to the company. A sole proprietor brings in money and property as capital. He doesn’t get paid, but he can get money from a store called Blueprint.

Real estate activities

Benefits of self-employment

Being a sole proprietor brings with it several privileges. The sole owner can be his own boss. He can make business decisions without having to ask anyone else. It may, at its discretion, withdraw all or part of the profits made during the period. He can close the case however he wants. This is the simplest form of business transaction. A corporation does not require an income tax return; the corporation’s profits/losses are included in the owner’s profits/losses. A sole proprietorship can be established without any problems. Although in some cases permits are required to set up such a business, in most cases there are fewer legal obligations. A sole proprietorship does not need to be registered to establish a business. The formation of a sole proprietorship, unlike any other form of business, requires little capital. This form of business does not have to pay social security contributions.

Disadvantages of sole proprietorship

An exceptional undertaking is not without its drawbacks. The owner’s liability is unlimited, and his or her personal property can be sold by the company’s creditors to collect their claims. He is personally responsible for all aspects of the business he owns. When a lawsuit is filed against the corporation, it is deemed to be filed against the owner. If the owner cannot pay the business debts, he or she may be forced to file for personal bankruptcy. An exclusive exploitation can be transferred to a legal heir or sold to a third party to keep it in a new management. However, when a business owner dies, the life of the business also ends. Expanding a business organically is a difficult task for a sole proprietor. It is not allowed to issue shares or bonds to the general public in order to raise huge funds. It can either borrow from a financial institution or reinvest the profits generated by the activity in the company.

Conclusion on the advantages and disadvantages of sole proprietorships

While the sole proprietorship is favored in many ways, it is also not exempt from restrictions. It can be said that SMEs can be effectively and efficiently managed by one owner. But to establish a business on a large scale, the sole proprietorship is not the right choice at all.  Many start-ups in India choose to set up their business as sole proprietorships. Eventually, many choose to move to partner organizations or companies to work at scale.

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About the Author: Prateek

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