What do you understand by a sole proprietorship firm? explain its merits.
Answers
Answer:
The sole proprietorship is a form of business that is owned and managed by a single individual. That single individual has to supply capital owned or borrowed to the business.
As ownership belongs to one individual, it is both the prerogative and the responsibility of that individual to manage the affairs of business. He has to take decisions managerial, technical, financial, others to ensure efficient, effective, and profitable conduct of his business.
This form is also known as the proprietorship, single proprietorship, individual proprietorship, sole ownership, individual enterprise, and sole trader.
Characteristics of sole proprietorship:
1. Individual ownership and control.
2. Undivided responsibility of business obligations.
3. No (or minimal) government regulation.
4. Complete fusion of ownership and control
Answer:
a single owner business is called as soleproporitor ship
1. Easy and inexpensive process
The establishment of a sole proprietorship is generally an easy and inexpensive process. Certainly, the process varies depending on the country, state, or province of residence. However, in all cases, the process requires minimum or no fees, as well as very little paperwork.
2. Few government regulations
Sole proprietorships adhere to a few regulatory requirements. Unlike corporations, the entities do not need to spend time and resources on various government requirements such as financial information reporting to the general public.
3. Tax advantages
Unlike the shareholders of corporations, the owner of a sole proprietorship is taxed only once. The sole proprietor pays only the personal income tax on the profits earned by the entity. The entity itself does not have to pay income tax.
Explanation:
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