Sole ProprietorshipDon't' we often go in the evenings to purchase registers, pens, chart papers, etc from a small near by stationery store? Well, in all prospects, during the course of your transactions, you have interacted with a sole proprietor. Sole proprietorship is very popular and is the most suitable form of business organization for small businesses, particularly in their preliminary years of operation. Sole proprietorship Swetha, a brilliant final year student waited for her results to be declared, while at home she determined to utilize her free time. Having excellent skills in painting, she tried to decorate clay pots and bowls with innovative designs. She was thrilled at the applause showered on her by her friends and associates on her extraordinary work. She also managed to put up a sale of few pieces of exclusive hand pottery from her home to people at her neighborhood. As she was operating from home, she was able to salt away rental payments. As a sole proprietor, she was able to gain a lot of fame by just passing a word of mouth. In addition, she perfected her skills of painting pottery and shaped new motifs and designs. All this created great interest amid her customers and enhanced the demand for her products. She found that by the end of summer, she had been able to make a profit of Rs. 2500 from her meager investment in colours, pottery and drawing sheets. Her motivation led to engage this work as a line of business. She therefore, decided to start an artwork business of her own. She can prolong the business on her own as a sole proprietor, but she requires more money for proceeding with this business on a larger scale. Her father has recommended that she ought to form a partnership with her cousin to meet the requirement of additional funds and also for shouldering the responsibilities and risks. Simultaneously, his outlook is that there is a possibility for the business to grow further and may entail the formation of a company. She is unable to decide as to what form of business organization she should go in for?
Refers to a kind of business organization wherein an individual owns, manages, controls and receives all the profits and the risks as well. This is obvious from the term itself. The word "sole" implies "only", and "proprietor" refers to "owner".
Hence, a sole proprietor can be addressed as the only owner of a business.