Characteristics and objectives of Sole proprietorship
Characteristics of Sole Proprietorship:
1. Ownership: Sole proprietorship is owned and operated by a single individual who is solely responsible for all aspects of the business.
2. Liability: The owner bears unlimited personal liability for any debts or losses incurred by the business. This means that personal assets can be used to cover business liabilities.
3. Control: The owner has complete control and decision-making power over the business operations.
4. Taxation: Profits from the business are taxed as personal income of the owner.
5. Continuity: The business ceases to exist upon the death or retirement of the owner.
Objectives of Sole Proprietorship:
1. Autonomy: Many sole proprietors choose this legal structure in order to independently make decisions and control their business without interference from partners or shareholders.
2. Flexibility: Sole proprietors have the flexibility to adapt to changing market conditions and make quick decisions to meet customer needs.
3. Profit Maximization: The primary objective of most sole proprietors is to maximize the profitability of their business.
4. Personal Fulfillment: Some sole proprietors choose this business structure to pursue their passion and find personal fulfillment in running their own business.
5. Building Wealth: Sole proprietors have the opportunity to accumulate personal wealth by retaining profits and growing their business over time.