Since the emergence of the notion of business from the historical times, sole proprietorship has certainly been one of the most accepted forms of ownership of businesses all over the world. Often referred to as simply proprietorship or a sole trader, sole proprietorship is a kind of a business structure where there is one single individual who is responsible for running the business and owning it as well. In other words, in sole proprietorship, there is no difference, in terms of legalities, between a business and its owner. While subjected to tax, all the profits made or losses incurred mount up to the owner alone. Moreover in sole proprietorship, according to the definitions by economists, each and every asset belonging to the business are possessed by the individual owner and so are all of the debts of the business which automatically become his debts and thus he has to pay them from his private funds. Hence, it can be said that in terms of economics an owner in sole proprietorship form of business has what is known as unlimited liabilities. The whole idea of the “sole” arises from the fact that any notion of a partner in the business is totally absent. There is an interesting provision for a sole proprietor that allows him to carry on business under a trade name which can be different from his or her legal name and that he or she can even open a business account with a bank.

Among the several advantages of running a sole proprietorship business is the fact that these businesses are extremely simple and hassle free to start up. Compared to businesses with other forms of ownership, these involve fewer rules along with the fact that the owner has complete independence as far as business decisions are concerned. It has also been observed by experts that these businesses are not only easier to carry on with but are equally simple to terminate if necessary. Another significant point about this form of ownership is that the entire profits earned from the business go to the sole investor hence avoiding any kind of financial complications that may arise in the process. Moreover the owner or the sole proprietor generally has a fast decision making process as he doesn’t have any kind of opposition while going over the decision making procedure and the entire control of the business finally rests in his or her hands.

However, one must admit the fact that this form of ownership patter certainly has its share of drawbacks or disadvantages as well. One of the first things, which are common to all individuals planning to start a business, is that they normally face a number of difficulties while raising the necessary funds for the investment as he or she alone will be entirely responsible for all the liabilities. Moreover, paradoxically, in a sole proprietorship the risk involved keeps on getting bigger as the business becomes more and more successful in financial terms.>