Proprietorship Concern in India
Starting a Business:
A sole proprietorship is the oldest and the most common form of business. It is a one-man organization where an individual owns, manages and controls the business.
Its main features are:
Ease of formation is its most important feature because it is not required to go through elaborate legal formalities. No agreement is to be made and registration of the firm is also not mandatory. However, the owner may be required to obtain a license specific to the line of business from the local administration.
The capital required by the organization is supplied wholly by the owner himself and he depends largely on his own savings and profits of the business.
Owner has a complete control over all the aspects of the business and is responsible for decision making.
Owner enjoys the benefits or profits and also bears the losses of the business himself.
The firm has no legal existence separate from its owner.
The liability of the proprietor is unlimited i.e. it extends beyond the capital invested in the firm.
Lack of continuity i.e. the existence of a sole proprietorship business is dependent on the life of the proprietor as death may bring an end to the business. The continuity of business operation is therefore uncertain.
- Ease of formation
- Maximum incentive of work
- Secrecy of business
- Quick decisions and flexibility of operations
- Limited capital Investment
- Limited managerial abilityl
- Unlimited liability
Hence, this form of organization is suitable for the businesses which involve:
- Capital requirement is small
- Moderate risk
- Small financial resources
No need of registration in case of sole proprietorship businesses in India. Company registration is required for corporations only.