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Sole Proprietorship

Meaning: A sole proprietorship or one mans business is a form of business organization owned and
managed by a single person. He is entitled to receive all the profits and bears all risk of ownership.
Features: The important features of sole proprietorship are:
1. The business is owned and controlled by only one person. 2. The risk is borne by a single person
and hence he derives the total benefit. 3. The liability of the owner of the business is unlimited. It
means that his personal assets are also liable to be attached for the payment of the liabilities of the
business. 4. The business firm has no separate legal entity apart from that of the proprietor, and so the
business lacks perpetuity. 5. To set up sole proprietorship, no legal formalities are necessary, but there
may be legal restrictions on the setting up of particular type of business. 6. The proprietor has
complete freedom of action and he himself takes decisions relating to his firm. 7. The proprietor may
take the help of members of his Family in running the business.
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Advantages
1. Ease of formation: As no legal formalities are required to be observed. 2. Motivation: As all profits
belong to the owner, he will take personal interest in the business. 3. Freedom of Action: There is none
to interfere with his authority. This freedom promotes initiative and self-reliance. 4. Quick Decision:
No need for consultation or discussion with anybody. 5. Flexibility: Can adapt to changing needs with
comparative ease. 6. Personal Touch: comes into close contact with customers as he himself manages
the business. This helps him to earn goodwill. 7. Business Secrecy: Maintaining business secrets is
very important in todays competitive world. 8. Social Utility: Encourages independent living and
prevents concentration of economic power.
Disadvantages
1. Limited resources: One mans ability to gather capital will always be limited. 2. Limited Managerial
Ability. 3. Unlimited Liability: Will be discouraged to expand his business even when there are good
prospects for earning more than what he has been doing for fear of losing his personal property. 4.
Lack of Continuity: Uncertain future is another handicap of this type of business. If the sole proprietor
dies, his business may come to an end. 5. No Economies of Large Scale: As the scale of operations are
small, the owner cannot secure the economies and large scale buying and selling. This may raise the
cost of production.
Suitability of Sole Proprietorship Form
From the discussion of the advantages and disadvantages of sole proprietorship above, it is clear that
this form of business organization is most suited where:
1. The amount of capital is small 2. The nature of business is simple in character requiring quick
decisions to be taken 3. Direct contact with the customer is essential and 4. The size of demand is not
very large.
These types of conditions are satisfied by various types of small business such as retail shops, legal or
medical or accounting profession, tailoring, service like dry cleaning or vehicle repair etc. hence sole
proprietor form of organization is mostly suitable for these lines of businesses. This form of
organization also suits those individuals who have a strong drive for independent thinking and highly
venturous some in their attitude.

The Sole Proprietorship


This is considered the oldest simplest and the most popular form of agribusiness
organization. In most developed nations of the world, the agribusiness sole proprietorship is a
very popular form of organization but the organization structure of the business tends to be
affected seriously by inadequate finance. Agricultural sole proprietorship has only one owner
who takes all the risks, enjoys all the profit and makes all the managerial decisions. He therefore
takes the responsibilities (risks) of all that results from these decisions. In Nigeria, about 80% of
the people are engaged as sole proprietors in agribusiness enterprise with more than 50%
engaging in the production field of agriculture, forestry and fishery.
It should be noted that this form of agribusiness does not need any formal application to
be approved by the government before starting operation. Because they are not registered
legally, they do not pay taxes except they are recognize by tax collectors.
Advantages
The owner exerts complete control over plans, programmes, capital, policies and other
management decisions.
Legal formalities are not necessary and license fees are low.
Termination or modification of the agribusiness is easy.
Under good financial standing of the proprietor, leaders would be most wiling to extend lending
(funds) to the proprietorship.
Disadvantages
Possession of limited amount of capital for the funding process thereby limited the size of the
agribusiness and thus reducing the production scale.
Risk is great sine the owner is personally and unlimitedly liable for all debts to creditors.
Lender are always reluctant to lend money to private owners of agribusiness except where
collaterals are provided as security for such loans.
Sole proprietorship lacks stability and continuity as it depends solely on person. The dead of that
person in effect ends the business.
The burden of overall direction and coordination may be beyond the proprietors capacity when
the business becomes large.

advantages and disadvantages of sole ProPrietorshiPs


Themostcommonandsimplestformofbusinessisasole proprietorship.Manysmallbusinesses
operatingintheUnitedStatesaresoleproprietorships.Anindividualproprietorownsandmanagesthe
businessandisresponsibleforallbusinesstransactions.Theownerisalsopersonallyresponsibleforall
debtsandliabilitiesincurredbythebusiness.Asoleproprietorcanownthebusinessforanydurationof
timeandsellitwhenheorsheseesfit.Asowner,asoleproprietorcanevenpassabusinessdowntohis orherheirs.
Inthistypeofbusiness,theownerpaystaxesonincomefromthebusinessaspartofhisorherpersonal
incometaxpayments.
SoleproprietorsneedtocomplywithlicensingrequirementsofWestVirginia,aswellaslocalregulations
32 Going into Business in West Virginia
andzoningordinances.Thepaperworkandformalities,however,aresubstantiallylessthanthose
ofcorporations,allowingsoleproprietorstoopenabusinessquicklyandwithrelativeeasefrom
abureaucraticstandpoint.Itcanalsobelesscostlytostartabusinessasasoleproprietor,whichis
attractivetomanynewbusinessownerswhooftenfinditdifficulttoattractinvestors. advantages of a sole
Proprietorship Asoleproprietorhascompletecontrolanddecision-makingpoweroverthebusiness.
Saleortransfercantakeplaceatthediscretionofthesoleproprietor. Nocorporatetaxpayments.
Minimallegalcoststoformingasoleproprietorship. Fewformalbusinessrequirements. disadvantages of a
sole Proprietorship
Thesoleproprietorofthebusinesscanbeheldpersonallyliableforthedebtsandobligationsofthe
business.Additionally,thisriskextendstoanyliabilitiesincurredasaresultofactscommittedby

employeesofthecompany.
Allresponsibilitiesandbusinessdecisionsfallontheshouldersofthesoleproprietor.
Investorswontusuallyinvestinsoleproprietorships.
nOte:Ifthebusinessisconductedunderafictitiousname,itsuptothesoleproprietortofileall
applicableformsunderthefictitiousnameorunderdoingbusinessas(DBA).This,however,doesnot
meanthatthebusinessisaseparateentityfromalegalstandpoint.Thesoleproprietorremainsliable
evenifheorsheisdoingbusinessunderafictitiousname.
Mostsoleproprietorsrelyonloansandpersonalassetstoinitiallyfinancetheirbusiness.Somewillelect
toincorporateoncethebusinesshasstartedtogrow,whileotherbusinessownersmaintaintheirsole
proprietorshipformanyyears sole Proprietorship For-profitonly. Mayonlyhaveoneowner.
Companyoperatedunderbusinessfranchiseregistrationrequirements.
Nopersonalliabilityprotectionprovidedbylaw. Profitstaxedasindividualincome.
AsoleproprietorshipisnotrequiredtofilewiththeSecretaryofState.
Remember,thisisgeneralinformation.Itisimportanttoconsultwithsomeonewithexperiencewhocan
answeryourquestions.Formoredetailedinformation,visittheWestVirginiaSecretaryofStatesWeb
site,www.sos.wv.gov.

Sole Proprietorship
A business owned by just one person.
The easiest to register, through the Bureau of Trade Regulation and Consumer Protection (BTRCP)
of the Department of Trade and Industry (DTI).
Advantages
1. Easy and inexpensive to form; few government regulations 2. Complete control over your business
3. Get all the profits earned by the business 4. Dont have to pay any special income taxes
Disadvantages
1. Have to supply all the different talents needed to make the business a success 2. If you die, the
business dissolves 3. Have to rely on your own resources for financing 4. If the company incurs a debt
or suffers a catastrophe, you are personally liable (you have unlimited liability)
Sole Proprietorship
A sole proprietorship is a business which is owned and operated by an individual. The advantages of
this form of business structure include ease of formation, relative freedom in governance and
minimum government controls and restrictions. Disadvantages include less access to capital and
financial resources. Also, this form of business organization provides less protection with regard to
personal liability (if the owner's company should get into a position of owing more to others than the
amount of cash and other assets it has, the owner's personal assets -- home, car, etc. -- may be
required to be sold to pay the obligations of the business).

Mushroom production, which is currently being done in limited scale in some nurseries
and kindergartens, will be supported and expanded. This is because mushrooms require
very small space to produce, it can be produced throughout the year, it can be preserved
(dried) for consumption throughout the year and most importantly, they are very
nutritious (high protein, phosphorus, iron, thiamin and ascorbic acid). Moreover, local
expertise for mushroom production is available.

Ri Chol Song, UNICEF national program officer, and Ms. Kim Jae Su,
director of nurseries, inspect mushrooms at the Jae Rong country nursery.
Winter is not ideal for mushroom cultivation.

To ensure that mushroom spawns are readily available, its production will be partly
centralized. A nursery/kindergarten that had successfully produced spawns will provide
for 20 other nurseries and kindergartens.
The project will provide to each targeted institution a set consisting of plastic sheets,
mushroom growing media (corn cobs), electric steam sterilizer, voltage regulator,
refrigerator, ultra violet lamp, watering can, hose, and high-pressure sprayers.
The institutions receiving the sets are to supply other institutions with spawn for
mushroom production. During field visits to the institutions receiving the sets, caregivers
have shown their expertise on how to produce mushrooms spawns and to keep them
refrigerated for distribution