Q.Explain the important features of Sole Proprietorship.

Sole Proprietorship is defined by a set of closely-linked features that together explain both its advantages and its risks.

Sole Proprietorship is the form of business organisation owned, financed, managed, and controlled entirely by one individual, and its important features can be explained as follows:

1. One-man ownership and control — a single person owns the whole business and takes every decision alone, without needing anyone else's approval.

2. No separate legal entity — the law makes no distinction between the proprietor and the business; both are treated as one and the same person.

3. Unlimited liability — because the business is not legally separate from the owner, the owner's personal property can be used to pay business debts if business assets are not enough.

4. Sole risk-bearer and sole beneficiary — the proprietor alone bears every loss the business makes, but also keeps the whole of the profit, since there is no partner or shareholder to share it with.

5. Capital contributed by the owner — the capital needed to start and run the business usually comes from the proprietor's own savings, and, where required, from loans taken in his or her own personal name.

6. Minimum legal formalities — starting and closing a sole proprietorship generally needs far less legal paperwork than forming or winding up a partnership or a company.

7. Limited continuity — the business's life is tied to the life and capability of its owner; it may end on the owner's death, prolonged illness, or insolvency.

Together, these features explain why Sole Proprietorship is simple and flexible to run, but also why it struggles to raise large capital or survive changes in ownership.

A common mistake is listing merits (like 'easy to form') as if they were features on their own — keep the underlying feature (minimum legal formality) distinct from the merit that results from it (ease of formation).