Advantages Of Sole Proprietorship :

• Making quick decisions: A sole proprietor has complete responsibility in terms of

making business decisions. It results in faster decision-making for the business as there
is no need to consult multiple parties for every minor issue.
• Confidentiality: A sole proprietor can keep all business-related information to
themselves as the business’s only decision-maker. The law does not bind them to make
the accounts of a sole proprietorship public.
• Profit-sharing: A sole proprietor has complete ownership of profits arising from
business operations. They are not obligated to share profits with anyone else.
• Fulfillment: Since a sole proprietor is responsible for both the risks and rewards of their
business, even a minor success can give a greater feeling of pride and satisfaction than
other business forms.
Disadvantages Of Sole Proprietorship:
• Lack of Resources: Sole proprietorships struggle to raise capital compared to
partnerships or companies, relying mainly on personal funds and loans. This can delay
business growth.
• Dependence on the owner: A sole proprietorship is a business model where the owner
and business are one entity. Its continuity depends on the owner's well-being, and it can
shut down if there is no successor or heir in case of death, insolvency, imprisonment,
etc.
• Unlimited Liability: Sole proprietors risk their personal property if they are unable to
pay business debts, leading them to take minimal risks for business survival.
Management: A proprietor with limited finances may have to perform most or all business
activities, such as purchasing, managing client relationships, sales, marketing, and accounting,
without much assistance from others. While they may hire help, limited finances may prevent
them from hiring full-time staff.
Advantages Of Partnership:
Ease of Formation
• Forming and registering a partnership is easy. Closing it down is also simple
Financial Resources:
• Partners can boost a firm's finances and reputation, making it easier to secure credit
from creditors.
Flexibility:
• Partnerships offer flexibility, adaptability, and freedom to change capital, profit
sharing, pricing policies, and business operations as per market demands. It also
 allows new partners to join and undertake any lawful activity.
Reward for Effort:
• Partners can work together, oversee closely, and run the business independently to
achieve success. Unified ownership and management enable everyone to work hard
and achieve greater heights for the firm.
Secrecy:
• Partners can keep business secrets and avoid publishing or auditing their accounts.
Unlimited Liability:
Disadvantages Of Partnership :
Unlimited Liability:
Partner's debts are joint and several - one dishonest partner can ruin the business. Conflicts:
Partnerships rely on trust and mutual confidence, but differences can arise and cause rifts.
Differing skills and competencies can lead partners in different directions, resulting in a
negative impact on the business. It can be difficult to resolve these differences once they have
taken root.
Uncertain Future:
A firm's survival depends on the financial and physical health of its partners. New partners
need unanimous agreement and trust is hard to establish. Death, insolvency, or lunacy of any
partner can cause firm closure.
Not a Legal Entity:
A partnership firm has no separate legal entity and terminates upon the death or separation
of a partner. Partners are liable for all the debts.