Sole Proprietorship

Sole Proprietorship the oldest form of business organisation in which a business is owned and operated by one individual. This type of business was largely prevalent in ancient Egypt, Italy and Grace. The form widely prevails in business throughout the world including Bangladesh.

In the sole proprietorship, known alternatively as sole tradership, the proprietor is to take all risks. Some of the favourable characteristics of a sole proprietorship business that it is easy to start, its cost of starting is low, its enjoy full freedom in taking risk decision, has right to control, easy to wind up, has minimum legal restriction and the like. Because of the structure of the ownership, the owner pays no taxes other than the income tax. There is no definite legal procedure for sole tradership to be complied with. These features make sole proprietorship a common and popular form of business organisation. The most important advantage of sole tradership is, however, is its scale allowing anybody willing to start a business easily with the least amount of capital.

The sole trader bears unlimited liability and in case of insolvency, the creditors may take all the assets of the business that is in default and any other business owned by the proprietor, including his private home and possessions with certain exceptions as set forth in the bankruptcy law. A sole trader is to sustain all business losses if occurs. Similarly, he does not have to share the profits with others.

Although anyone possessing a legal entity can start a sole proprietorship business, he can not trade in illegal or prohibited goods or services. A sole tradership business has no legal identity other than that of its owner. But, the sole trader is not restricted to shifting from one activity to another or enlarging his activities as a corporation. He can make contracts and hold assets in his own name.

The sole traders accumulate capital and finance operating costs from their own resources and savings, loans from friends, relatives, neighbours, local moneylenders, co-operative societies and micro-finance agencies such as ngos, grameen bank, and special business financing schemes.

Almost 85% businesses in Bangladesh are operated as sole tradership. A relatively large investment business conducted by sole proprietors in the country is that in the real estate sector. Most sole proprietors conduct small businesses such as retail shops that sell stationary, groceries, cloth, medicines, handicrafts, books, confectioneries, spare parts, and tyre/tube, wholesale stores. Many operate amusement business, and service marketing such as hotels, restaurants, guesthouses or tailoring, hairdressing, road, and water transportation. Sole traderships in Bangladesh are usually classified as small, medium and large depending on the size of capital employed. The capital range, however is only relative: a small sole trader has a capital of less than Tk 100,000, a medium one between Tk 100,000 and 500,000 and a large above Tk 500,000. Sole traders are the most exclusive group of businessmen in the rural areas and in almost all the district towns. [Abul Klam Azad]