Merits or Advantages of Sole-Proprietorship

The advantage of sole proprietorship concerns are following:

1) Ease of Formation:

The excellent advantage of sole proprietorship is that it can be established easily and quikly.There is no need for complicated legal formalities in constituting sole proprietorship. The simple decision of the owner of resources to start a business gives rise to sole proprietorship.

2) Ownership of All Profits:

The sole proprietor is the owner of the entire profit earned by the business unit. This profit is not to be shared with anyone else.

3) Maintenance of Secrecy:

The maintenance of utmost secrecy in all the matters is of vital importance for the success of a business. Thus secrecy in sole proprietorship enables the owner to go ahead over its rivals.

4) Self Interest of Owner:

A sole proprietor is the sole recipient of the profits of the business. This factor stimulates him to work hard and creates his interest to devote his all energies for the efficient and successful operation of the business.

5) Quick Decisions:

As every decision is in the hand of the sole proprietor of the business, he avails the business opportunities by making quick decisions on all vital issues and promptly puts them to action.

6) Freedom of Action:

The sole proprietor is free to make all decisions himself and there is no restrictions imposed on him relating the operation of business.

7) Self Employment:

A sole proprietor is not to work for any one. He works for his own business and does not have to obey orders of anyone else. Instead he orders his employs and directs them to work.

8) Minimum Government Regulations:

The sole proprietorship is exempted from any special act to govern its working. The activities of sole proprietorship are governed by minimum government regulations.

9) Low Cost:

The formation of sole proprietorship does not require much cost due to minimum Government regulations unlike partnership and Joint Stock Company.

10) Direct Relationship with Customers:

The sole proprietor is in direct contact with his customer. This individual personal attention to customers results in increased sales. It also enhances goodwill and reputation of the business

11) Tax Advantage:

The sole proprietorship form of business organization enjoys tax advantage over other forms. He is taxed only as an individual and not as a business unit.

12) Ease of Dissolution:

The dissolution of the sole proprietorship is as easy as its formation. The decision of the owner alone ends the business. He is not required to justify his decision to withdraw from the business before the authorities.