Sole Proprietorship

What are the Different Kinds of Sole Proprietorship Business can be formed?

calendar28 Mar, 2021
timeReading Time: 4 Minutes
Kinds of Sole Proprietorship Business

The sole proprietorship is the business form which is owned, managed and controlled by a single owner. The sole proprietorship is not a legal entity like a corporation and partnership. It simply refers to a single person who owns the business and his identity coincides to that with the business entity. Because of this fact the sole proprietor is personally liable for all the debts.

There are diverse forms of business enterprises. So, choosing the most appropriate form of business organization is a very important decision. Therefore, it is very crucial for the owner to consider and weigh the merits and demerits and then select amongst the different kinds of sole proprietorship business that is best suitable to him.

What is Sole Proprietorship Business?

The sole proprietorship is a popular business form because of the simplicity, easy setup, and nominal amount. A sole proprietor is required to register his name and obtain the local licenses, and the proprietorship business is ready.

The business can function under the owner’s name or he is also allowed to do business under a fictitious name like Nikita’s Nail Art Salon. This fictitious name does not create any separate legal entity from that of the sole proprietor owner.

What are the Characteristics of Sole Proprietorship Business?

Single Ownership

The sole proprietor is the sole owner of the business.

No Separation of Ownership & Management

The owner himself manages his sole proprietorship business with his own knowledge and skill and hence there is no separation between the ownership and management.

Less Legal Formalities

The sole proprietorship business does not require any legal formality and hence the formation is easy and simple.

No Separate Entity

The sole proprietorship business and the sole proprietor both are one and same and there is no separate entity. The owner is responsible for all the liabilities himself.

No Sharing of Profit and Loss

The sole proprietor enjoys the profit alone and at the same time the entire loss is his own loss.

Unlimited Liability

The liability of the owner or the sole proprietor is unlimited. And if he is not able to pay the liabilities then his personal properties can be utilised to pay off the same.

One Man Control

It is run completely by one person who is the owner of the entity and he is his own master.

Read our article:An Ultimate Guide to Registration of a Sole Proprietorship Firm in India

What are the Lists of Activities for Most Suitable Sole Proprietorship Business?

The sole proprietorship business form is appropriate for numerous activities which range from local transportation, consultancy services and retail business. The proprietorship business formation shall be appropriate for businesses in its primary stage and for those proprietors having less capital investment and small group of employees.

Based on the features of the sole proprietorship business, the most suitable businesses list is as given below:-

features of the sole proprietorship business

Activities Involved in Retail Trading

The sole proprietorship business involving retail trading activities such as household goods, electric goods, grocery selling, general store, merchandise, bakery etc. can be done with a very negligible risk by the sole proprietor. The capitals required for initial investment are also very minimal which helps the sole proprietor in choosing this business[1].

Catering Business

The food stalls or the Catering business does not necessitate for a corporate structure to be formed. Only few workers will do for the effortless and proper functioning of such business. These businesses work under the direct control of one person and are a good option for proprietorship business.

Software Consultancy

This business can be managed with medium capital flow and the service in it is a basic software system requirement. Thus, a sole proprietorship business in software consultancy can be easily handled by a single person.

Small Scale Gruh Udhyog

Small scale Gruh Udhyog operates with a minimal capital requirement and with small team of employees. Its key features include less risk that very well matches with the feature of the sole proprietorship. Thus, this sole proprietorship business could be the suitable choice. Food items like farsan, sweet, khakhra and other things like agarbatti, and various handicraft items, etc. are included under this category.

Tax and Legal Consultancy

Lawyers, Chartered Accountants and Company Secretaries often choose proprietorship business being in the service industry. This business requires very a small amount of capital and the concerned professional is directly accountable for his actions irrespective of the business structure.

Learning Assistance (Tutor)

Learning assistance or tutoring services are provided by the sole proprietors at home or by renting a suitable commercial place. With the help of only few employees or the sole proprietor on his own can choose this particular sole proprietor business and keep the whole sum of profit in his pocket.

Freelance Writers

Freelance writers work independently on contractual basis that does not requires much capital and can work from home. This activity at the starting stage does not necessitate a planned form of business with compliance fulfilment.

Clinic & Healthcare

Most of the clinic and healthcare entities start as a sole proprietorship business in their starting stage. The sole proprietors need to look for stability in starting their business first before taking it into a structured entity.

Repair & maintenance services

The repair and maintenance of automobiles, household appliances, electronic machineries etc. are frequently provided at local shops, consumer place or garage. And these can be the best suitable sole proprietorship business.

Local Transportation Services

Transport services like auto, e-rickshaw or mini buses require minimal capital and just few employees. A person can individually operate dealing with the passengers and can best serve the interest of sole proprietorship business.


The sole proprietor has to be careful while deciding the kind of business. Therefore, it is important to have the knowledge about the various kinds of sole proprietorship business that are best suitable with the needs and requirements of the enterprise. Hence, the above given list is few of the best suitable sole proprietorship businesses which the owner can decide to proceed with.

Read our article:Procedure for Sole Proprietorship Registration: A Step by Step Guide

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