COMMERCE 101

SOLE PROPRIETORSHIP

Hey Everyone, Happy New Week. This week shall bring Good News for everyone of us in Jesus name- Amen. so let's get started.... 

A Sole Proprietorship may be defined as a business organisation established, owned, financed and controlled by one person with the arms of making profit. This form of business unit is one of the oldest type of business organisation owned by individuals. In other words, it is a type of business unit in which one person provide the capital, bear the risk and takes full responsibilities of the business. For Example- Tailor, Carpenter etc.

Features/Aim of Sole Proprietorship:

* Owned, Managed and Controlled by One Person.

* Owner bears all the risk alone.

* Capital used in forming and running the business, comes from the Sole Owner.

* The motive of the formation of a business, is to make profit.

Source of Capital for Sole Proprietorship:

# A Sole Proprietor can obtain capitals from his personal savings, which can serve as Initial

Capital.

# A Sole Trader can raise Loan to Finance his Business, through Friends and Close Relatives.

# A Sole Trader can obtain Capital by raising either overdraft, or loan from the financial institution.

# A Sole Proprietor can obtain Capital by Purchasing goods on credit, from the supplier, producers or wholesalers.

Advantages of Sole Proprietorship:

v  There is an enjoyment of privacy in the business, since the company is not required by law to summit their annual account to the registry to publish it to the public.

v  The Business can be established with a small capital, from the owners personal savings.

v  All profit belongs to the owner of the business.

v  They is always quick decision-making in the  business.

v  It is easy to manage, since the business is small in size and few workers are needed.

v  The owner formulates the rules and regulation guiding the business.

Disadvantages of Sole Proprietorship:

·         He bears all loses alone, because he does not share the profit of the business with anybody.

·         He has little financial resources to start a business which can prevent expansion in the productive capacity of the organisation.

·         A Sole Trading cannot exist forever, when the owner dies, the business also goes out of existence.

·         The owner may not have the necessary managerial skills to run the affairs of the business effectively.

Reasons for the Continuous Existence of Small Scale Businesses:

ü  Small Capital Requirement- The Small Scale business requires small capital to set up.

ü  Easy to Establish- The Small Scale business units are easy to set up or establish since no formalities are required.

ü  Provision of Incentives for Hard Work- There is always incentive for hard work since ownership instills pride and drive for success.

ü  They enjoy Customer's Loyalty- Small Scale Business units always enjoy customer's loyalty and good relationship, which ensures continued patronage.

ü  Ability to Change Policies- The Policies of the business can be easily and quickly changed to meet with the changing needs of the customers.

ANSWERS:       

                                                   

1. A- F.O.B (WAEC 2006 NO 9).

2. C- Customs and Excise Authority (WAEC 2006 NO 21).

3. B- lay days (WAEC 2006 NO 25).

4. D- Embargo (WAEC 2006 NO 18).

5. C- Bonded Warehouse (WAEC 2006 NO 23).

6. A- Ports Habours Authority (WAEC 2006 NO 24).

7. B- Pipeline (WAEC 2006 NO 35).

8. D- Ports Authority (WAEC 2006 NO 47).

9. C- Delay at the Port (WAEC 2006 NO 33).

10. B- Mail Order Business (WAEC 2006 NO 46).

NOTE: ALL THE ANSWERS IN THIS POST ARE CREDITED TO WEST AFRICA EXAM COUNCIL 2006 PAPERS. SOME ANSWERS WERE HOWEVER ALTERED TO SUIT THE PURPOSE OF THIS POST. THANKS

This brings us to the end of today's session. Hope this was very helpful to you, leave a comment of what you think of this tutorial and of your questions below. Have a Blessed Day and Remember You are Amazing. God Bless.