When a person owns a business organization, it is known as a sole proprietorship
The following characteristics can be seen in sole proprietorship.
• Management decisions are taken by the owner.
• Unlimited liability.
• No continuous existence.
• Registration is not compulsory.
• Profits and losses are borne by the owner.
• Risk is borne by the owner.
• No going concern.
• Accounting is not compulsory.
• Taxes are not paid in the name of the business, but taxes on the business income
should be paid by the owners under their private name.
Several advantages of sole trader businesses are given below.
• Can be started easily.
• All profits can be enjoyed by the owner.
• Decisions can be taken independently.
• Few rules and regulations.
• Confidentiality of business information.
• Can wind up easily.
• Several disadvantages of sole trader businesses are given below.
• Unlimited liability.
• Difficulties in raising capital.
• Incorrect decisions can be taken.
• No guarantee of continuous existence

Sole trader businesses should be registered at the divisional secretarial under the
Business Names Ordinance No. 6 of 1918, if it is carried out in an other name other than the
owners name.
The following procedure has to be followed when they are registered.
• Obtaining the application form, from the divisional secretary’s office where the business is
going to be located.
• The application form used to register a name of a sole trader business.
• The report of the “Grama Niladari” required for the registration of a business name.
• Submitting the Grama Niladari report and the completed application form to the
divisional secretary with the registration fees.
• Issuing of certificate of business name registration by the divisional secretary, taking the
above facts into consideration.