Sole Proprietorship

Sole Proprietorship Characteristics


  • Per the Registration of Business Name Act, 1962, (Act 151); Where the name of the business is not a natural name, it must be registered;
  • A registered business name must be renewed annually.
  • A Sole Proprietorship needs a Business Operating Permit (BOP) from the appropriate local authority.


  • Easy to Setup
  • Better Control
  • Flexibility in Operations
  • Prompt Decisions
  • No Profit Sharing
  • No Corporate Tax
  • Ease of Ending Business


  • Unlimited Liability: The liability of business covers the personal assets of the owner.
  • Limited Financial Resources: The ability to raise capital or take a loan is always limited.
  • The inadequacy of finance is a major setback for growth.
  • Limited Capacity of Individual: The capacity of the sole owner to manage the business is limited.
  • Uncertainty of duration: The existence of a sole proprietorship business is linked to the life of the proprietor. Ill health, death or insolvency of the owner brings an end to the business.

Suitability of Sole Proprietorship

  • It is suitable where the market is limited, localized and customers give importance to personal attention.
  • The nature of business is simple and requires quick decisions on the go
  • For businesses where the capital required is small and risk involvement is not heavy,
  • Ideal for small scale start ups