2. SOLE
PROPRIETORSHIP
AND DIFFERENCE BETWEEN SOLE PROPRIETORSHIP &
PATERNERSHIP

3. Group Member’s
Naeem ur Rehman
FA15-017
Haroon Saeeed
FA15-137
Uzair Ahmed
FA15-082
Shah Jahan
FA15-151

4. Overview
• Describe characteristics of a sole proprietorship.
• List advantages of a sole proprietorship.
• List disadvantages of a sole proprietorship.
• Difference b/w Sole Proprietorship and Partnership

5. Sole Proprietorship
• Definition
 A sole proprietorship is a business entity with a single
owner/operator.
 A business entity is a professional organization offering
something that has real existence.

6. Sole Proprietorship Characteristics
• Characteristics
• The following factors characterize a sole
proprietorship.
A. It is the oldest, most common, and simplest form
of business organization.
B. One person can serve as the business decision-
maker.
C. No registration with the state is required, as is
necessary with a corporation or a limited liability
company.

7. Sole Proprietorship Characteristics
• Characteristics
D. It is easily set up and maintained.
E. The owner is personally responsible for assets,
income taxes, and business debts.
F. It is relatively simple to manage and control.

8. Sole Proprietorship Advantages
• Advantage
A sole proprietorship has several advantages.
a) The owner is has his or her own boss.
b) No legal formalities are involved in forming or
dissolving the business.
c) The money the business makes belongs to the
owner.
d) Decisions can be made quickly.

9. Sole Proprietorship Advantages
• Advantage
E. Start-up costs may be minimal.
F. A sole proprietorship is a good type of
organization for a business:
• 1. That will remain small
• 2. That does not have great exposure to liability

10. Sole Proprietorship Disadvantages
• Disadvantages
A sole proprietorship has several disadvantages.
A. Raising capital to start the business is difficult.
1. Banks are less willing to lend money to one
person for a business venture.
2. Banks that approve loans may have higher
interest rates.

11. Sole Proprietorship Disadvantages
• Disadvantages
B. The owner has unlimited liability.
• Both the business and personal assets of the sole proprietor are
subject to the claims of creditors.
• When the owner assumes unlimited liability, he or she may
lose all personal and business assets to pay bills or money owed
to other parties.
C. The business ends if the owner dies

12. Sole Proprietorship Disadvantages
• Disadvantage
G. The sole proprietor must pay a self-employment tax,
which consists of contributions to Social Security and
Medicare.
• In addition, he or she must pay estimated taxes throughout
the year.
H. The sole proprietor may have to register the business
name and pay local taxes for owning a business.

13. Difference b/w Sole Proprietorship and
Partnership
Sole Proprietorship Partnership
Owner
One person ownership. Minimum two persons
Formation
It can be established easily. Comparatively difficult

14. Difference b/w Sole Proprietorship and
Partnership
Sole Proprietorship Partnership
Division of profit & loss
Gets all profit and bears loss. Profit and losses are shared as
per agreement
Regulation of Business
No special act or ordinance Governed by Partnership
to govern the working. Act of 1932.

15. Difference b/w Sole Proprietorship and
Partnership
Sole Proprietorship Partnership
Scale
On small scale due to limited On large scale due to
resources. more resources & ability.
Management
Business is run and managed Managed and run by all
by one person. or anyone acting for all.

16. Difference b/w Sole Proprietorship and
Partnership
Sole Proprietorship Partnership
Business Secrets
Business secrets are closely Business secrets are known
guarded. to all partners.
Dissolution
Dissolution is as easy as it’s Dissolution takes place
formation. by an agreement or by
the order of court.

17. Conclusion
Sole Proprietorship or Partnership both have it’s importance on
different levels. For instance, Sole Proprietorship is suitable for
small scale businesses and Partnership is suitable for medium or
large size business.