Identify the merits or limitation of sole proprietorship hidden in the quoted line.
(a) "The sole proprietor can easily change the size of the business."
(b) "All the profits of the business belong to the sole proprietor."
(c) ''Inability of the owner to manage all the activities of business himself.
Identify the merits or limitation of sole proprietorship hidden in the quoted line.
(a) "The sole proprietor can easily change the size of the business."
(b) "All the profits of the business belong to the sole proprietor."
(c) ''Inability of the owner to manage all the activities of business himself.
Merits of Sole Proprietorship :
(a) Ease of formation and dissolution : The sole proprietorship is the simplest form of business ownership. There is hardly any formality involved in setting up this type of organization. This ownership organization is not governed by any special act.
(b) Sole claim on profits : The sole trader is the only person to whom the profits belong. This always acts as a stimulant to the personal incentive.
Limitations of Sole Proprietorship :
(c) Limitations of management : She/He must rely upon his/her own skills and judgement in managing the business. Few proprietors have all of the management skills required for financing, marketing, purchasing, supervising personnel, and related functions. Not only does this limit the size of the business, but it also contributes to the relatively high rate of failure among sole proprietorships.
Merits of Sole Proprietorship :
(a) Ease of formation and dissolution : The sole proprietorship is the simplest form of business ownership. There is hardly any formality involved in setting up this type of organization. This ownership organization is not governed by any special act.
(b) Sole claim on profits : The sole trader is the only person to whom the profits belong. This always acts as a stimulant to the personal incentive.
Limitations of Sole Proprietorship :
(c) Limitations of management : She/He must rely upon his/her own skills and judgement in managing the business. Few proprietors have all of the management skills required for financing, marketing, purchasing, supervising personnel, and related functions. Not only does this limit the size of the business, but it also contributes to the relatively high rate of failure among sole proprietorships.
