Non-Corporate Entities (NCEs), i.e. proprietorship, partnerships, plays crucial role in economic growth. NCEs play crucial role in some sectors and one of which is retail. About more than half of the industrial units are

A sole proprietorship business is established and managed by a single person. This type of business form is best suitable for individuals wishing to start a business with less investment. Generally, it does not require any registration as such. The control of the business is solely in the hands of the single proprietor/owner who invests in the business. He bears all the losses of the business and enjoys all the profits. The sole proprietor can appoint persons for conducting the business, but the ownership will rest solely with him. Many local businesses such as grocery stores, parlours, boutiques, retail stores, etc., can be established as a sole proprietorship firm. Even small traders and manufacturers can establish a sole proprietorship firm. Benefits of Sole Proprietorship: Less compliance: The sole proprietorship business can be started easily by just one person. There is minimum compliance that is required to be adhered to get it incorporated. This form of business is economical as it is relatively less expensive to start than a company or LLP. In case of a registered partnership firm, there are more compliance requirements as compared to a firm. Control of the business: The sole proprietor will have complete control over the business. He will look after all the aspects of the business. Since only one person is running the business, secrecy can be maintained. Whereas in partnership firm all partners can participate in management activities, decision making, and have the right to control the business. Quick decision making: The sole proprietor takes all decisions of the business. The decision-making rests with a single person. Thus, the decisions can be taken quickly and immediately without the need for consulting anyone. Whereas in partnership firm all the decisions are taken by the partners together, and partners are also liable for the acts and decisions taken by other partners. Profit sharing: The sole proprietor has unlimited liability and enjoys all profits of the business. In case of partnership firm, profits are shared amongst all the partners equally, or in the decided profit-sharing ratio. Limitations: Unlimited liability: There is an unlimited liability on the sole proprietor. He is personally liable for all the transactions he enters in the business. If any loss occurs, he will have to bear the whole loss out of his personal estate. All the partners share the liability arising out of the acts of the firm. No perpetual succession: There is no perpetual succession which means it can come to an end if something happens to the sole person taking care of the business. It can shut down at any time. This makes the business unreliable and difficult to gain public trust for entering into agreements or contracts to expand the business. Difficult to raise funds: Since a single person manages the business, it is not easy to raise capital. The capital of the business is from the investments put in by the sole proprietor. The sole proprietorship firm has no separate legal entity status from the owner. As it can come to an end at any time and there is no separate entity, it is difficult to obtain funds from third parties.