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What are the advantages and disadvantages of sole proprietorship form of business?

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:

  • Going it Alone - How to Manage as a Sole Proprietor | YouInc.com

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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.
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