Sole Proprietorship

DEFINATION OF SOLE PROPRIETORSHIP

A sole proprietorship is business owned and operated by one individual. The owner may operates on his or her own employed others. The owner of the business has personal liability of the debts incurred

ADVANTAGES OF SOLE PROPRIETORSHIP

Easy to form and wind up.

A sole proprietorship form of business is very easy to form. With a very small amount of capital you can start the business. There is no need for any legal formalities.

Direct motivation.

The profits earned belong to the sole proprietor alone and he bears the risk of losses as well. Thus, there is a direct link between the effort and the reward.

Quick decisions.

In a sole proprietorship business the sole proprietor alone is responsible for all decisions. He is free to take any decision on his own.

Better control.

In sole proprietorship business the proprietor has full control over each and every activity of the business. Since the proprietor has all authority with him, it is possible to exercise better control over business.

Maintenance of business secrets.

Business secrecy is an important factor for every business. It refers to keeping the future plans, business strategies, etc., secret from outsiders or competitors.

Close personal relation.

The sole proprietor is always in a position to maintain good personal contact with the customers and employees. Direct contact helps the sole proprietor to know the individual likes, dislikes and tastes of the customers.

Encourages self-employment.

Sole proprietorship form of business organization leads to creation of employment opportunities for people. Not only is the owner self-employed, sometimes he also creates job opportunities for others. Thus, it helps in reducing poverty and unemployment in our country.

DISADVANTAGES OF SOLE PROPRIETORSHIP

Limited capital.

In a sole proprietorship business, the owner arranges for the required capital for the business. It is...