parlors, etc, can also be run by a sole proprietor. This form of businessis the oldest and most common form of business organization.
According to J. K. Hanson
is a type of businessunit where one person is solely responsible for providing the capital,for bearing the risk of enterprise and for the management of the business.”
Characteristics of Sole Proprietorship
The following are the main characteristics of a sole proprietorship:
The most important characteristics of sole proprietorship are that theownership management and control of the organization is vested withthat individual only.
In this form of business organization, the capital is contributed by thesole proprietor from his own resources. If he requires more finance, itmay be borrowed from his friends and relatives. Thus the invite burdenof capital requirement for this business is the sole responsibility of theowner. He may arrange it from its own or by borrowing of his own risk.
No separate legal existence
No distinction is made between the enterprise and its owner and bothare looked upon as one any same person. Death or insolvency of thesole proprietor brings his business to an end.
The sole proprietor is personally responsible for the control andmanagement of enterprise. There is no interference from any person inthe management. He has full authority to take decisions for guiding thedestiny of the enterprise. Thus, sole proprietorship is a one-man show.
The liability of a sole proprietor is always comprehensive andunlimited. The personal property of the proprietor would also be usedto pay off the debts and loans of any incurred from the outsider if the business assets one insufficient to meet such of outsiders in caseliabilities of the enterprise cannot be paid out of assets of the enterprise.This provides a check on the reckless actins of the sole proprietor.