SOLE PROPRIETORSHIP BUSINESS

In the beginning an enterprising person engages himself in small business instead of big business. Because it is possible to get relatively good results in small business. The high productivity, high work efficiency and labor intensive nature of small businesses makes success easy. In this chapter we will discuss the types and basic structure of small business.

SMALL BUSINESSES TYPICALLY HAVE THE FOLLOWING :

➧Sole proprietorship business
➧Partnership business
➧corporation
➧Representative business

The structure of this business is very simple and easy. 100% ownership of the business rests with one person. A person who is singularly efficient and fully confident in himself ventures into such a business.

Suppose a person has specialized technical skills in refrigeration and air-conditioning and is capable of repairing and re-operating a refrigerator or air-conditioner when it breaks down. That person can start a sole proprietorship business of repairing refrigerators and air-conditioners entirely on his own initiative. Dedication, hard work, honesty, punctuality etc. are required to succeed in business. Often the target is below the sign board of a shop-like establishment Prop.- Sri. A. B. Das as example word is written. It means Prop. - Proprietaries owner and at the same time Shri A. B. A person named Das owns it. It is also simple to manage the bookkeeping of a sole proprietorship business. Owner's personal property and business property need not be shown separately. The portion of profits derived from the business is reported on the owner's personal income tax return. Owner's Personal PAN - Payable from Income Tax Department is used as Business PAN. A separate PAN is not required for business. All profits and losses of the business are borne by the day owner.

SOME EXAMPLES OF SOLE PROPRIETORSHIPS THAT ARE COMMONLY SEEN ARE -

Manufacturing Business

1. Grill manufacturing company.
2. Furniture manufacturing company.
3. Book barrier manufacturers etc.

Service Business

1. Repair of refrigerators and air-conditioners.
2. Repair of two-wheedlers - scooters, bikes, bicycles etc.
3. Pump Mechanic.
4. Electrician.
5. Transport business etc.

Advantages of Sole Proprietorship

1. Easy to get started.
2. Speed in decision-making - Only owner's decision is acceptable.
3. Flexibility regarding work hours and work priorities.
4. Benefits of maintaining trade secrets.
5. The convenience of starting and ending business at any time.

Disadvantages of Sole Proprietorship

1. Insufficient capital.
2. The owner alone cannot be competent in all matters. He may be a good craftsman but not so good at accounting or marketing.
3. Business remains small. Business expansion is completely dependent on the mindset of the owner.
4. There remains the possibility of business closure due to illness or death of the owner or key person.
5. If the business is closed due to debt, the owner's personal property is likely to be seized.