Advantages:
As sole proprietorship form of business ensures the presence of a single person who acts in the capacity of owner, financer and manager, it has a number of advantages to its credit. These are:
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Its formation is very easy as it does not involve compliance of lager formalities.
- It facilitates maintenance of secrecy in business operation.
- It ensures quick decision and flexibility in operation.
- It ensures effective control and supervision.
- It reduces cost of production and it has developed a state of inherited goodwill.
- It is of national importance and ensures many tax advantages.
Disadvantages:
Despite of many advantages to the credit of sole proprietorship, this form of business organization is not free from limitations. The followings arte some of important limitations:
- Unlimited liability ensures attachment of personal property to meet claims of outsiders.
- It has limited financial resources and there is uncertainty with regard to duration.
- It has limited managerial ability and has restricted growth.
- This form of business ensures monotony and hard work.
- It is mostly unsuitable for large scale production.