4. Sole Proprietorship
A business owned and managed by one individual.
The sole proprietorship is the oldest, most common, and simplest form of
business organization. A sole proprietorship is a business entity owned and
managed by one person. The sole proprietorship can be organized very
informally, is not subject to much federal or state regulation, and is
relatively simple to manage and control. Almost 85% businesses in
Bangladesh are operated as sole trader ship. Most sole proprietors conduct
small businesses such as retail shops that sell
stationary, groceries, cloth, medicines, handicrafts, books, confectioneries
, spare parts, and tyre/tube, wholesale stores. Many operate amusement
business, and service marketing such as hotels, restaurants, guesthouses or
tailoring, hair dressing, road, and water transportation. The capital
range, however is only relative: a small sole trader has a capital of less
than Tk 100,000, a medium one between Tk 100,000 and 500,000 and a
large above Tk 500,000.
5. Sole Proprietorship - Key Attributes
Creation (minimum requirements) - No Formalities for creating a sole
proprietorship.
Profits / Losses / Distributions - Owner may use all profits and losses for
business.
Liability - Owner faces unlimited personal liability.
Capital / Financing - All capital obtained from owner or through loans
based on owner's creditworthiness.
Duration - Usually no continuity upon disability, retirement or death of
owner.
Transfer of Ownership - Assets may be sold in entirety or in part.
Management and Control - Owner manages and controls the company.
Taxation - The business does not file or pay taxes.
Reporting Requirements - None.
Fees - None.
6. Advantages
Ease of starting
Control
Sole participation in profits and losses
Use of owner’s abilities
Tax breaks
Secrecy
Ease of dissolving
7. Disadvantages
unlimited liability
Difficulty in raising capital
Limitations in managerial ability
Lack of stability
Demands on time
Difficulty in hiring and keeping high-achievement employees
