TYPE OF BUSINESS

SOLE
PROPRIETORSHIP

SOLE PROPRIETORSHIP
Section

4, the Business Registration Act 1956 defines a single

business as a business established, owned, financed in terms of
finances and management handled by a single individual.

It

usually involve a small-scale business

Examples

of business sole proprietorships are tailors, beauty salon,

convenience store and laundry.

Features

Description

Possession

Sole proprietorship owned and operated

by one person only

Establishment

Business established under Business

Registration Act 1956 ( Amendment
1978 )

Transferability

May transfer his business to someone

else

Management

The sole proprietorship owns and

manages the firm himself and can
employ employees to manage the firm
for him

Security over assets

A sole proprietorship cannot create

floating charges but can mortgage the
firms assets

Registration

Ease to register

Capital

Require a small capital

The distribution of profits and losses

Owner will own and bear all profits and

losses derived from business.

Business period / life

Business life is not guaranteed.

ADVANTAGES AND
DISADVANTAGES OF SOLE
PROPRIETORSHIP
BUSINESS
Advantages
Disadvantages
Easy to manage

Limited capital

Formation and dissolution is easy

Liability is not limited to - personal

property can be used to cover liability

Business profits will be the overall owner

Business Development limited

depending on the owner

This business is not subject to

government regulation and legislation

Business life is not stable and vulnerable