Concept of Sole proprietorship : Meaning, Features or characteristics,Merit and Demerits

Business refers to an organization in which goods and services are manufactured and helps in sale and exchange of goods and services. Whenever we start a business we will discuss about what kind of business is profitable . So in this article we will discuss Concept of Sole proprietorship its meaning , Features, merits and Demerits.   

Concept of Sole proprietorship

Sole proprietorship refers to a business organization in which enterprises are controlled or owned by a single person. Sole proprietorship is the oldest form of business enterprise in India. It is the simplest form of business and all the risk or losses are bearer by single person. In case, 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 simplest way to open business.

According to William R. Basset “The one-man control is the best in the world if that man is big enough to manage everything”.

It is also known in simple words one man business which is organized and controlled by single person.

Features or Characteristics

Now lets have a look at the Features and characteristics of the concept of sole proprietorship

  1. Liability of members

In sole proprietorship the liability of its members is unlimited because only single person control and manage organization.


  1. Ownership and control

In sole proprietorship business only single person control business. Its owner will manage and take all decision regarding business.



  1. Member required

No members are required in sole business. In case there is need of person they get help of their family, friends and relatives.


  1. Legal formalities

No legal formalities are required under sole proprietorship business.


  1. Business entity

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


Merits / Advantages of Sole proprietorship


  1. Single owner

In sole proprietorship only single person is required who is owner of the business and take decisions.


  1. Unlimited liability

In sole proprietorship, there is unlimited liabilities of its owner because only he has right to control and manage organization.


  1. High secrecy

In sole business secrecy is maintained by its owner because only he is single person who take business decisions.


  1. Decision making

There are no difficulties in decision making because only single owner take decision and manages business.

Demerits / Disadvantages of sole proprietorship

  1. Lack of continuity

In sole proprietorship lack of continuity is there because when owner of business is died the business doesn’t carry by another person, it will be closed.


  1. Less time

In sole proprietorship there is no participation of third person and thus it takes less time in taking decisions.


  1. More burden

Burden of the organization falls on single person who is the owner of it because only he has right in business.

So we have studied & discussed Concept of Sole proprietorship and if you have any query please let us know in the comments section below.


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