MGT211

Introduction to Business
Lecture 03
Definition
 Sole Proprietorship is that type of business
which is owned by one person.
Advantages of Sole Proprietorship
 Freedom in formation
 The easiest to establish
 Individuals are allowed to decide without
interference of any other person.
 Easier to transfer the ownership of the
business
 People wholly solely enjoy the ownership of
the business and profits
Advantages of Sole Proprietorship
 Individual has unlimited opportunity to expand
the size of the business
 Individual can keep the secrets of the
business intact
 Individual has personal interest in the
business
 Owners can make speedy decisions
 Easy to dissolve
Disadvantages of Sole Proprietorship
 Limited amount of capital
 Continuity problem
 Sole Proprietorship has limited life and is
dependent on the owner
 Owner of the business has unlimited liability
towards people whom he has to pay
Partnership
 A relationship of the people to share
investments and profits
 Partnership act 1932 governs all affairs of the
partnership
Advantages of Partnership
 More capital
 Relatively easier to form
 Sharing of responsibility
 Light credit standing
 Business can have more loan from various
sources
 Secrecy
Advantages of Partnership
 Public Confidence
 Better Decision
 Easy to dissolve