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Simple English definitions for legal terms
proprietary capital
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A quick definition of proprietary capital:
Proprietary capital is the money that someone puts into their own business. It's like when you use your own allowance to start a lemonade stand. This is different from when people invest in a big company by buying stocks. Proprietary capital is the initial investment made by the owner of a business.A more thorough explanation:
Proprietary capital refers to the money that represents the initial investment in a sole proprietorship. It is the owner's personal investment in their business.
For example, if John starts a small business and invests $10,000 of his own money, that $10,000 is considered proprietary capital. It is not borrowed money or money from investors, but rather John's personal investment in his business.
Proprietary capital is important because it shows the owner's commitment to the business and their willingness to take on financial risk. It is also used to calculate the owner's equity in the business, which is the value of the business assets minus its liabilities.