Explain in detail about the Sole proprietorship
Sole proprietorship, as the name suggests, is where an individual is the sole owner of a business. This type of business is often quite small in terms of size (as measured, for illustration, by sales revenue generated or number of staff employed); though, number of such businesses is very large indeed. Instances of sole-proprietor businesses can be found in most industrial sectors but particularly within service sector. Hence, services like electrical repairs, picture framing and photography, retail shops, driving instruction and hotels have a large proportion of sole-proprietor businesses. Sole-proprietor business is easy to set up. No formal procedures are required and operations can frequently commence immediately (if special permission is required due to the nature of trade or service, like running licensed premises). Owner can decide the way in which business is to be conducted and has the flexibility to restructure or dissolve business whenever it suits. Law doesn't recognise sole-proprietor business as being separate from owner, so business would cease on the death of the owner.
Though the owner should produce accounting information to satisfy taxation authorities, there is no legal requirement to produce accounting information relating to business for other user groups. Though, some user groups may demand accounting information about business and may be in a position to have their demands met (for instance, a bank requiring accounting information on a regular basis as a condition of a loan). Sole proprietor would have unlimited liability that means that no distinction would be made between the proprietor's personal wealth and that of business if there are business debts that should be paid.