Since time immemorial any natural form of business organization which is still operating in bigger way is the sole proprietorship.
It is the oldest form of business universally located at every corner of the world. Be it in a rural village or in metropolitan city, if any form of business is common, that is sole trader. It is the simplest form of business organization and again much more popularity since a long.
An important decision which an entrepreneur has to make is the legal structure of his enterprise. An enterprise can be owned by one person individually or many persons jointly.
This decision is important because the choice of ownership form affects the rights, duties, and obligations of owners as well as its functioning, growth and mobility to future period of time.
Several structural alternatives are available from which the choice can be made. Sole tradeship is from and among many other form of business in which an individual with knowledge, skill, talents and money can come forwards to set up this form of business organization.
He is the owner, manager, velar and controller of every thing of that business. He enjoys all the benefits so also bears the entire loss independently we can simply say that role trading business is a one man business who owns it, finance the same, manager any control all activities of the business by enjoying the benefit as well as risk fully.
Sole proprietorship or individual entrepreneurship is a business concern owned and operated by one person. The sole proprietor is a person who caries on business exclusively by him and for himself. He alone contributes the capital and skills and is solely responsible for the results of the enterprise.
In fact, he is the supreme judge of all matters pertaining to his business subject only to the general laws of the land and to such special legislation as may affect his particular business.
Sole proprietorship is also termed as sole trading or individual proprietorship or one man business. In other words, it is one man show in which an individual by virtue of his knowledge, skill, organizer, manager, controller and master of his business activity.
A few definitions of sole proprietorship are given below:
“A sole proprietor is a person who carries on business exclusively by and for himself. He is not only the owner of capital of the undertaking, but is usually the organizer and manager and takes all the profits or responsibility for losses”.
“The individual proprietorship form of business organization is an organization at the head of which stands an individual as the one who is responsible, who directs its operation and who alone runs the risk of failure:. L.H.Haney.
“A sole proprietorship is a business unit whose ownership and management are vested in one person. The individual assumes all risks of loss or failure of the enterprise and receives all profits from its successful operation”. Peterson and Plowman.
“The proprietorship is that form of business organization which is owned, managed and controlled by a single individual who receives all the profit and risks all his property in the success or failure of the enterprise”. Charles S. Tippets.
From the above definitions, it is clear that in sole trading form of organization, is one man business in which an individual carries on business independently as its owner, manger and operator. He contributes his own capital, knowledge, skill and labour with a consideration to enjoy all the benefits arising out of it or assume all the risk of ownership.