Despite limitations of size and resources, many people continue to prefer sole proprietorship over other forms of business organization. Sole proprietorship refers to a form of business organization which is owned, managed and controlled by an individual who bears all risks and receives all profits.
Sole Proprietorship form of business organization is suited mainly in areas of personalized services and small scale activities. On the other hand, shortage of capital and limited abilities of an individual who is the proprietor. Still many people continue to prefer proprietorship over other forms of organization. Without a doubt, as sole proprietorship offers many advantages such as,
Prompt Decision Making
The decision making is prompt under sole proprietor as there is considerable degree of freedom in making business decisions. Importantly, there is no need to consult others as in case of partnership or co-operative. This results in effective capitalization of market opportunities as and when they arise.
Confidentiality
All the information related to business operations is kept confidential and secrecy is maintained as the sole decision making authority rests with the proprietor unlike partnership or co-operative form. A sole proprietorship is also not bound legally to publish firm’s accounts as in case of a company.
Learn More : Free! Format of a Confidentiality Agreement and a Template to Download
Incentive to Work
The sole proprietor receives all the business profits as a reward for bearing the business risk. He/She is the single owner and does not need to share profit. This provides an incentive to the sole proprietor to work hard.
Sense of Accomplishment
There is a sense of personal satisfaction involved in working for oneself. It instills a sense of accomplishment and confidence in the individual. As he/she is the one who takes all the decisions without any interference from others; which is present in all other forms of organization.
Also Learn : 9 Steps to Start Your Business Seamlessly
Ease of Formation and Closure
An important merit of proprietorship is the possibility of entering into business with minimal legal formalities. There is no separate law that governs sole proprietor unlike other forms like co-operative or company. As sole proprietorship is the least regulated form of business, it is easy to start and close the business as per the wish of the owner.
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