Sole Proprietorship

Key features of sole proprietorship include:

1. Single Ownership: The business is owned and managed by one individual, who assumes all responsibilities and risks associated with the business.

2. Simplified Setup: Setting up a sole proprietorship is relatively easy and requires minimal legal formalities. There is no need for separate registration, as the business operates under the proprietor’s name or a trade name, often referred to as a “Doing Business As” (DBA) name.

3. Unlimited Liability: One significant drawback of sole proprietorship is that the owner has unlimited personal liability for the business’s debts and obligations. In case of any business-related legal issues or debts, the owner’s personal assets could be at risk.

4. Taxation: In most countries, the income from a sole proprietorship is treated as the owner’s personal income, and it is taxed accordingly. This means that the owner reports business income and losses on their individual tax return.

5. Decision-making: The sole proprietor has the freedom to make all business decisions independently, without the need to consult partners or shareholders.

6. Profit Retention: The sole proprietor has the right to keep all the profits generated by the business.

7. Limited Life: A sole proprietorship does not have a separate legal identity from its owner. Therefore, if the owner passes away or decides to sell the business, the sole proprietorship ceases to exist.