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What are the Features of Sole Proprietorship?

What are the Features of Sole Proprietorship - ilearnlot

Sole proprietorship highlights or characteristics or Features; It refers to a business organization in which enterprises are controlled or owned by a single person. The sole proprietorship is the oldest form of business enterprise in India. It is the simplest form of business and all the risks or losses are bearer by a single person. Also, if he wants any help they can get it from their friends, family, or relatives. It doesn’t require any legal recognition or formalities and the simplest way to open a business. Also learn, Sole Proprietorship: the Advantages and Disadvantages!

Explaining, What are the highlights or characteristics or Features of Sole Proprietorship?

Also, A sole proprietorship is a business owned by a single individual. This sole owner is responsible for the entire business and is the sole recipient of the business’s earnings. Unlike other legal structures, the sole proprietorship requires less paperwork and is subject to few business restrictions and regulations.

15 best Features of Sole Proprietorship:

The main highlights or characteristics or features of the sole proprietorship form of business can list as follows:

One Man Ownership:

In the proprietorship, only one man is the owner of the enterprise.

No Separate Business Entity:

No distinction is made between the business concern and the proprietor. Both are the same.

No Separation between Ownership and Management:

In the proprietorship, management rests with the proprietor himself/herself. The proprietor is a manager also.

Unlimited Liability:

Unlimited liability means that in case the enterprise incurs losses, the private property of the proprietor can also utilize for meeting the business obligations to outside parties. As there is no division between the business and the business person, accordingly the individual risk of the entrepreneur is boundless. If the business can’t pay its obligations and liabilities, at that point, the entrepreneur is responsible for the equivalent and pay them. For example, the proprietor needs to pay the forthcoming sum either by selling their resources or property, a house, care, and others.

All Profits or Losses to the Proprietor:

Being the sole owner of the enterprise, the proprietor enjoys all the profits earned and bears the full brunt of all losses incurred by the enterprise.

A Less-Formalities:

A proprietorship business can start without completing many legal formalities. Some businesses too can start simply after obtaining the necessary manufacturing license and permits.

Personal Organization or Common Identity:

A sole traders’ concern has no separate legal entity independent of the owner. The owner and the business concern are the same. The owner owns everything the business owns and he owes everything the business owns.


In the sole traders, the capital is employing by the owner himself from his personal resources. He may also borrow money from his friends and relatives if he cannot depend solely on his personal resources.

Profits and Losses:

The surplus arising in the business of the sole trader entirely belongs to him and similarly, all the business losses and risks are to be borne by him alone.

No Special Legislation:

Sole traders are not governing by any special legislation. A partnership firm is governing by the Partnership Act, a joint-stock company is governing by the Companies Act, and a co-operative society by the Co-operative Societies Act. Any person who is competent to contract can start his business as a sole trader. However, he is subject to the common law, the law of contract, and the law of insolvency.

The concept of Unlimited Liability. As well as, the liability of a shareholder or member of a company or a co-operative society limits to the extent of the face value of the shares held by him. For example, if Mr. X subscribes to 100 shares of Rs. 10 each, his total liability is unto Rs. 1,000 only. If he has already paid Rs.5 per share, his liability will restrict to the unpaid portion of his shares, i.e., Rs. 500 only. Thus, there is a limit to the extent of liability of the shareholder of a company.

What are the Features of Sole Proprietorship - ilearnlot
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No Legal Formalities:

There is no different law-related with a sole proprietorship to oversee it and accordingly, there is no presence of any arrangement of extraordinary standards just as guidelines to follow. Also, best of all, it doesn’t require either any enrollment or consolidation of any sort. Much of the time, we require just the permit to fire up the ideal business. Like that of the beginning, there are no legitimate tasks joined to the end methods. Along these lines, it gives effortlessness to start a business and do it with less issue.

Danger and Profit:

The proprietor of this business is the danger carrier in a sole exclusive. Since the business person is the main individual who put resources into the business monetarily, so all dangers have a place with him in particular. Regardless of whether the business fizzles or develops, the proprietor is the individual who gets influenced by the equivalent. Actually, he additionally appreciates all benefits acquired from the business. There is no compelling reason to separate and offer benefits with partners as there is no presence. Consequently, he bears all dangers and acquires benefits as well.

No different legitimate character:

In legitimate terms, the business and the proprietor are not treated independently as both are the one and same thing. No different legitimate element has a place with a sole owner and the proprietor is entirely and solely answerable for all business exercises and exchanges.


As we as a whole realize that the business and the proprietor have a similar character. In this way, a sole proprietorship has altogether depended on the entrepreneur. A few variables influence a sole proprietorship, for example, retirement, craziness, demise, and detainment. In such a circumstance, the sole proprietorship puts to an end.


As all the business activities and duties lie with the sole owner, so he controls all the business solely. No other individual can participate in business exercises and the proprietor can alter or grow the business according to their solace and plans.

These are altogether highlights or characteristics or features of a sole proprietorship that will clarify what precisely the business structure and how it runs. Let us take a look at the upsides of selecting a sole proprietorship that we will write down underneath.

Nageshwar Das

Nageshwar Das

Nageshwar Das, BBA graduation with Finance and Marketing specialization, and CEO, Web Developer, & Admin in

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