There are different types or form of business.
But according to syllabus only three types of business are mentioned; they are:
1. Sole proprietorship
2. Partnership firm
3. Joint Stock Company
A sole proprietorship is also known as the sole trader or a proprietorship.
It is run by one individual or one legal person.
There is not legal difference between the owner and the business.
The owner controls all the elements of the business.
His family can support him. He is accountable for the finances of the business.
The owner receives all profits and has unlimited responsibility for all losses and debts.
Every asset of the business is owned by the proprietor and all debts of the business are payable by him.
A sole proprietor may use a trade name or business name.
Some family members can help to run the business.
But they are not partners or shareholders.
Sole proprietorship can use trademark and copyright.
There are two types of sole proprietorship business; they are:
(a) Goods selling
(b) Service providing
The main advantages of sole proprietorship are given below:
Easy to establish a sole proprietorship.
Comparatively low cost needs to start business.
Lowest regulatory burden.
Direct control of decision making.
Minimal working capital is required.
Tax to government is according to PAN and VAT.
The main disadvantages of sole proprietorship are given below:
Unlimited liability for business debts.
Most of the business cannot be run if proprietor is absent.
Difficulties in raising capital.
He/she has to manage everything.
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