Sole proprietorship is a type of business in which only the owner, known as the sole proprietor, is responsible alone for all investment of capital and management of the business. He enjoys the profit solely and also suffers the risk alone. Sole proprietorship is the oldest and most common form of business in India. This is because sole proprietorship business enjoys several advantages which are not found in any other type of business. As the owner is solely responsible for the management of the firm, he can control the firm independently and can take quick decisions in every situation. He is motivated to work because he enjoys the profit solely and has a personal touch with the firm. Dissolution of the firm can be done easily due to least restrictions. It is also economical to start a sole proprietorship business because almost no formalities are present in its formation.
Sole proprietorship business can be formed easily as only the following things are required:
Name of the organization, provided that it is not already trademarked by any other firm. Sole proprietor must register the name of firm soon after thinking the name of the organization.
Sole proprietorship business can be formed easily as only the following things are required:
Name of the organization, provided that it is not already trademarked by any other firm. Sole proprietor must register the name of firm soon after thinking the name of the organization.
Owner must select the type of product he wants to deal in. He should check that the product he chose is legal in the eyes of law.
A good site must be selected for setting up the business. He must check whether there is demand of the particular product in that area.
Proprietor should open a bank account in the nearby bank so that he can deal with the customers in cheque, in case of transactions of bulky amount.
Advertisement of the firm must be present in the most suitable type of media used nearby.
A website can be made if the proprietor wants to flourish his business in future. Creating website will provide knowledge to general public about the firm.
Stationery material like memos, pen, etc. which will be needed to give customers a professional bill.
Proprietor must register for tax other than income tax. Some taxes which he should register are service tax, professional tax, etc. depending upon the condition of the firm.
Easy formation of business is the best advantage of sole proprietorship business. But, as there are two sides of a coin, similarly, in spite of the advantages there are several disadvantages too of starting sole proprietorship business. Limited availability of capital resource, limited managerial ability, unlimited liability, limited scope for expansion and uncertain life are some disadvantages of sole proprietorship business. Seeing the advantages and disadvantages, it can be concluded that sole proprietorship is only suitable in certain cases. Place where local market is established, market where taste and preference of the customer changes frequently, area where risk involved is minimum, site in which quick decisions can be taken and place where business can be established by investing small capital are the cases in which sole proprietorship business can be established without any risk. Therefore, if any person finds any place, where the things match with the above mentioned points, is the ideal place for the formation of sole proprietorship business by just completing the things required.
