Q.Define sole proprietorship and state who supplies the capital and bears the risk in it.

The definition of sole proprietorship makes clear that a single person plays every role in the business at once — owner, financier, manager and risk-bearer.

A sole proprietorship is the simplest and oldest form of business organisation, owned, financed, managed and controlled by a single individual. That one person is at once the owner, the financier, the manager and the risk-bearer of the business.

J. L. Hanson defined it as "a type of business unit where one person is solely responsible for providing the capital, for bearing the risk of the enterprise, and for the management of the business." From this it is clear that the proprietor himself supplies the entire capital — from his own savings or from money borrowed on his personal credit — and the proprietor alone bears the whole risk of the business, since there is no partner or shareholder with whom to share either the capital burden or the risk.

Describing it as a business 'with a few owners' or confusing it with partnership — a sole proprietorship has exactly one owner, which is the whole meaning of the word 'sole'.