Various Business Entities

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A sole proprietorship is a form of business ownership that is owned and controlled by one person. The proprietor provides the capital, manages the business, bears all the risks, and receives all the p…

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It is called a one-person business because ownership, management, control, profits, and risks all rest with one individual. No separate person shares authority in the business.

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Unlimited liability means the sole proprietor is personally liable for all business debts. If business assets are not enough, personal property may also be used to pay the debts.

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A sole proprietorship and its owner are treated as one in law. The business has no legal identity separate from the owner, so business and owner exist together.

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There is minimum government regulation. No legal formalities are required to start, manage, or close the business, though a licence may be needed in certain businesses.

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The main limitations are limited funds, limited managerial ability, unlimited liability, and lack of continuity. The business depends completely on one person.

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L.H. Haney. The statement shows that one individual controls the business and bears the risk alone.

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Partnership is the relation between persons who have agreed to share profits of a business carried on by all or any one of them acting for all. It is based on agreement and profit sharing.