A sole proprietorship, also known as sole trader, is a form of business operated by one individual.
Sole Proprietorship is the most traditional form of business. It offers nearly NO protection to the owner of the business but yet is the easiest & cheapest to set up.
Once you have set up a sole proprietorship to run your business, you are personally responsible for all the profits and losses your business incurs.
In the situation where your business fails and liabilities remained unsettled, any of your personal assets will be risked to be taken to settle all liabilities incurred by your business.
From Small to Big
On the positive side, a sole proprietorship is the easiest form of business to set up.
Many big companies are also started from small businesses, such as Genting, YTL, IOI, etc.
You may transform your business into private limited company (Sdn Bhd) in the later time after generating stable income and recording higher business revenue.
A sole proprietorship, or simply a proprietorship, is owned and run by one natural person and in which there is no legal distinction between the owner and the business.
If the owner is hit by any unwilling tragedy and suffering death, the business will be ended and closed.
Loans and Options
Generally, small businesses are mostly funded by personal savings or borrowings from friends and relatives.
Sole proprietor may also able to obtain finance supports or cash investment by inviting partnership from others. The sole proprietorship will be transformed into partnership after introducing new partner into the business.
Small traders in Malaysia can also apply small loans or grants from the relevant Government Departments in financing the business operations.
Before you, as a sole proprietor, apply for a business loan from any party, it is important to maintain a good credit records with all banks and merchants, including credit cards and existing personal car or house loans.