Introduction to Sole Proprietorship
According to the name describes the sole proprietorship is in which an individual is the sole owner of a business. These businesses are quite small in terms of size (for instance, as measured, through sales revenue generated or number of staff used); though, the number of such type of businesses is extremely large indeed. Instances of sole-proprietor businesses can be found in several industrial sectors but mainly in the service sector.
Therefore, services like electrical repairs, and photography, picture framing, driving instruction, retail shops and hotels contain a large proportion of sole-proprietor businesses. The sole-proprietor business is simple to set up. No formal techniques are needed and operations can frequently begin immediately (unless unique permission is needed due to the nature of the trade or service, like running licensed premises). The owner can make a decision the way according to which the business is to be conducted and has the flexibility to restructure or dissolve the business when it suits. The law does not know the sole-proprietor business like being separate from the owner that is why the business will stop on the death of the owner. Even though the owner must generate accounting information to assure the taxation authorities, there is no legal need to produce accounting information that are relating to the business for other user groups.
Though, a number of user groups may demand accounting information concerning the business and might be in a position to have their demands met (for instance, a bank requiring accounting information on a regular basis since a condition of a loan). The sole proprietor will have limitless charge that means that no difference will be made among the proprietor's personal wealth and that of the business if there are business debts which must be paid.
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