There is no separation between the owner and the firm.
The owner faces unlimited personal liability.
This type of business has a limited life.
More difficult to transfer.
Advantages of Sole Proprietorship:
Ease of formation: Sole proprietorship is easily formed as compared to other forms of business, Starting a sole business is less complicated and much cheaper, The proprietorship can be named after the name of the owner.
Decision making: As there is only a single owner, all the important decisions regarding the firm lies in the hands of the owner.
Employment: Sole proprietorship can hire employees. This results in many kinds of benefits related to job creation.
Disadvantages of Sole proprietorship:
Liability: This is the biggest drawback of sole proprietorship. The owner is directly responsible for any losses, debts or violations coming from the business. The owner can be sued in case an employee gets committed in any unlawful act.
Difficulty in raising funds: The owner usually provides the initial funds so, it becomes difficult to generate capital. Sole proprietorship does not issue stocks or any other money generating investments like other types of firms.
Lack of continuity: The business does not continue if the owner becomes deceased or incapacitated.
No comments:
Post a Comment