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Simple English definitions for legal terms
individual proprietorship
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A quick definition of individual proprietorship:
Individual proprietorship is a type of business where one person owns everything and is responsible for everything. This means they own all the things the business needs, like the building and equipment, and they owe all the money the business owes. They also make all the decisions and run the business by themselves. It's like having your own lemonade stand, where you make the lemonade, sell it, and keep all the money.
A more thorough explanation:
An individual proprietorship, also known as a sole proprietorship, is a type of business in which one person owns all the assets, owes all the liabilities, and operates in their personal capacity.
For example, if John owns a small bakery and is the only person responsible for running the business, he is considered an individual proprietor. He owns all the equipment, ingredients, and profits, but is also responsible for any debts or legal issues that may arise.
Another example is a freelance writer who works for themselves and operates under their own name. They are responsible for all aspects of their business, including finances, marketing, and client relations.
Individual proprietorships are common among small businesses and freelancers because they are easy to set up and require minimal legal paperwork. However, they also come with the risk of personal liability and limited growth potential.