MANAGEMENT

Detailed explanation-1: -The life span of a sole proprietorship can be uncertain. The owner may lose interest, experience ill health, retire, or die. The business will cease to exist unless the owner makes provisions for it to continue operating or puts it up for sale. Losses are the owner’s responsibility.

Detailed explanation-2: -The survival and continuity of sole proprietorship firm depend upon one person only. If the proprietor falls ill or becomes insolvent then the business may come to an end.

Detailed explanation-3: -A sole proprietorship-also referred to as a sole trader or a proprietorship-is an unincorporated business that has just one owner who pays personal income tax on profits earned from the business. Many sole proprietors do business under their own names because creating a separate business or trade name isn’t necessary.

Detailed explanation-4: -The life-span of the business is determined by the individual (proprietorships automatically cease on the retirement or death of the sole proprietor). For purposes of taxation* business income is reported and taxed through the sole proprietor’s personal tax return.