Sole ProprietorshipA business owned and managed by one individual.The sole proprietorship is the oldest, most common, and simplest form ofbusiness organization. A sole proprietorship is a business entity owned andmanaged by one person. The sole proprietorship can be organized veryinformally, is not subject to much federal or state regulation, and isrelatively simple to manage and control. Almost 85% businesses inBangladesh are operated as sole trader ship. Most sole proprietors conductsmall businesses such as retail shops that sellstationary, groceries, cloth, medicines, handicrafts, books, confectioneries, spare parts, and tyre/tube, wholesale stores. Many operate amusementbusiness, and service marketing such as hotels, restaurants, guesthouses ortailoring, hair dressing, road, and water transportation. The capitalrange, however is only relative: a small sole trader has a capital of lessthan Tk 100,000, a medium one between Tk 100,000 and 500,000 and alarge above Tk 500,000.
Sole Proprietorship - Key AttributesCreation (minimum requirements) - No Formalities for creating a soleproprietorship.Profits / Losses / Distributions - Owner may use all profits and losses forbusiness.Liability - Owner faces unlimited personal liability.Capital / Financing - All capital obtained from owner or through loansbased on owners creditworthiness.Duration - Usually no continuity upon disability, retirement or death ofowner.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.
Advantages Ease of starting Control Sole participation in profits and losses Use of owner’s abilities Tax breaks Secrecy Ease of dissolving
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