Sole Proprietorship

This is the oldest and most common form of business. Main features of this form are:

  • Ease of formation (no elaborate legal formalities)
  • Capital to be provided by owner himself
  • Complete control
  • No separation of ownership
  • Unlimited liability
  • Lack of continuity- the business ceases to exist if the owner dies
  • Difficulty in raising capital

Advantages

Disadvantages

Ease of formation

Limited capital

Incentives to owner to do well

Limited managerial ability

Quick decisions and flexibility

Limited life

Secrecy of business

Unlimited liability


Suitable for:

  • Businesses involving moderate risk
  • Small financial resources and small capital requirements.
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