Sole Proprietorship

Sole Proprietorship	Private Limited Company
Public Limited Company	Joint Hindu Family Business

A sole proprietorship is one of the oldest forms of business that is owned and operated by one individual. The proprietor is personally liable for all debts and claims against the business. From taxation point of view also, the owner and his business are one entity, which means that business profits are reported and taxed on the owner's personal tax return.

Features
Some of the important features of a sole proprietorship are:

• Ease of formation: This form of organization can be easily formed as it does not involve any cumbersome legal formalities. Registration of the firm is not mandatory. The owner of the business is sometimes required to obtain a license pertaining to the line of business from local government agency.
  
  
• Capital Requirement: The capital required by a sole proprietorship firm is wholly provided by the owner himself .
  
  
• Control: The owner has complete control on all the issues related to the business. He and the business are considered one legal entity, so he can take all the decisions related to any aspect of running the organization.
  
  
• Distribution of Profits/ loss: The owner is responsible for any profit generated or loss incurred by the organization. The owner has unlimited liability and it extends beyond his capital investment in business.
  
  
• Legal Entity: Both the owner and the organization are treated as one legal entity
  
  
• Lack of Continuity: The organization exists only so long as the proprietor is alive. In the event of accident, illness or death of the proprietor, the business comes to an end.

Advantages

• Ease of formation
• Better control and business administration
• Flexible and quick decision making
• No sharing of profits

Disadvantages

• Availability of Limited capital
• Difficulty in raising finance
• Unlimited liability of the proprietor
• Uncertain life span of organization