Despite limitation of size and resources, many people continue to prefer sole proprietorship over other forms of organisation

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formsofbusiness

#1

Despite limitation of size and resources, many people continue to prefer sole proprietorship over other forms of organisation. Explain.


#2

Yes, despite limitations of size and resources many people continue to prefer sole proprietorship over other forms organisation because of following,merits of this form of organisation.
1.Ease of formation and dissolution : It is simple and inexpensive to start a sole trade business. It is not necessary to fulfil any legal formalities like registration, etc. Any person can start this form of organisation by investing a small amount of capital and can dissolve it as per his will.
2.Prompt decisions : Under this form of organisation, the sole trader is the sole owner and can take decisions promptly without consulting anybody else.
3.Freedom of choice of business: If due to any reason, there are losses in the business, the sole trader can easily change his business and can start a new one which can earn more profits to him. Thus, he has full freedom regarding the choice of the business.
4.Sole recipient of profits : In this form of business organisation, one person has the sole claim on profits and for increasing his profits he works hard and takes interest.
5.Secrecy : Secrecy is one of the most important factors for the success of every business. In sole proprietorship the owner is in an advantageous position to keep his plans secret.
6.Flexibility : It is very convenient for the sole proprietor to expand or curtail his business activities in accordance with the changing business environment.