Despite limitations of size and resources, many people continue to prefer sole proprietorship over other forms of organisation because of the following reasons:
1.Quick decision making : A sole proprietor enjoys considerable degree of freedom in making business decisions. Further, the decision making is prompt because there is no need to consult others. This may lead to timely capitalisation of market opportunities as and when they arise.
2.Confidential and secrecy : Sole decision-making authority enables the proprietor to keep all the information related to business operations confidential and maintain secrecy. A sole trader is not bound by law to publish the firm’s accounts.
3.Direct incentive : A sole proprietor directly reaps the benefits of his/her effort as he/she is the recipient of all the profits.
4.Sense of accomplishment : There is personal satisfaction involved in working for oneself. The knowledge that one is responsible for the success of the business not only contributes to self satisfaction but also provides a sense of accomplishment and confidence in one’s abilities.
5.Ease of formation and closure : 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.