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Definition: A type of business entity where a company is owned and run by only one individual and where no legal distinction is made between the owner and the entity.

Accounting for a Sole Proprietorship

All profits and losses directly affect the finances of the owner meaning that all assets of the business are owned by the owner and all debts must be paid from their personal resources.

The owner has unlimited liability as in some partnerships. The difference being the owner is not in business with any partners.

A sole proprietor may in fact do business with a trade name other than their legal name. As a result, the individual can also open a business account in a bank.

Details and Differences between Business Entities

Learn in greater detail about the benefits and risks of each type of business entity
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Synonyms
  • Single proprietorship
  • Sole proprietor
  • Sole trader
Related words
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e-conomic in brief

e-conomic is an online accounting software used by more than 48,000 companies and 4,100 accountants worldwide - from sole practitioners to large accounting firms. The software is easy to use and flexible, and you can give your accountant free access.