Advantages & Disadvantages of Sole Trader

Advantages & Disadvantages of Sole Trader

Advantages and Disadvantages of Sole Trader
Advantages	Disadvantages
Ease Of Organization Any one can generally start his own business without any red tape or undergoing any legal formalities as a sole proprietorship. The business selected however must be legal.	Unlimited Liability It has already been pointed out that practically everything a sole proprietor possesses or own its subject to liquidation for the purpose of paying business liabilities.
Ownership Of All Profits A sole proprietor is entitled to all the profits of the concern. No other form of the business organization permits one person to enjoy 100 per cent profits earned by the concern.	Expansion Difficulties It is not generally possible for an individual proprietor to furnish all the capital required for an expanding business.
Personal Incentive And Satisfaction There is a great personal incentive and sense of accomplishment in a sole proprietorship. When an individual knows that he will enjoy all the profits of the concern and he will have to suffer all the losses, he will try his level best to make the business successful.	Risk Of Loss It was pointed out while discussing the merit of sole proprietorship that the sole trader is entitled to all the profit of the business and need share them with no one. But in case of loss there would be no one to share with the proprietor any losses the business might have.
Freedom And Promptness Of Action An individual proprietor having no one else to consult can take decision freely and promptly.	Management Difficulties Generally in a sole proprietorship management and control are concentrated in one individual but one individual may not be personally well equipped to discharge all the duties and functions of management efficiently and the exclusive management that ties the owner down to his business may become quite burdensome.