Sole Proprietorship

Sole Proprietorship
• A single individual organizes, has title to and
operates the business in his/ her own name
 Characteristics of Sole Proprietorship
• Single ownership
• No separate legal entity
• Total capital
• Unlimited liability
• Management
• No profit sharing
• High and total risk
• Limited life
Advantages of Sole Proprietorship
• Easy formation • Secrecy
• Freedom of decisions • High credit standing
and actions • Tax advantages
• Quick decision making • Easy dissolution
• Less legal requirements • Self employment
• Flexibility in operations • Low management cost
• Personal contacts with • Suitable for small
customers businesses
 Disadvantages of Sole Proprietorship
• Unlimited liability • Lack of specialization
• Limited talent • Lack of public
• Limited capital confidence
• Limited expansion • No benefits of large
• Uncertain duration of scale
business • Low bargaining power