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pk

SOLE
PROPRIETORSHIP
LECTURE # 3
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Out Line
Legal Forms of Businesses
Introduction to Sole Proprietorship
Definitions
Characteristics
Advantages
Disadvantages
Scope of sole proprietorship
One man control
Suitability
Suggestions To Promote Sole Proprietorship

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LEGAL FORMS OF BUSINESS

Sole Proprietorship
Partnership
Company

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Introduction
Simplest Form of Business
Oldest Form of Business
No Legal Requirements
Single Trader

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DEFINITION

“Sole proprietorship form of business ownership

in which the Business is owned and operated by
one person”.

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CHARACTERISTICS
Ownership
Management & control
Finance
Risk
• Ease of dissolution
Unlimited liability
No legal formalities
Legal status
Relationship with customers
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ADVANTAGES
Ease of formation
Sole authority
Sole claim on profit
Flexible and inexpensive management
Credit standing
Minimum legal restrictions
Secrecy
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Cont……………..
Possible tax advantage
Direct relationship with customers
Power to start & close the business
Benefit of inherited goodwill
Reducing concentration of wealth
Self employment
Development of personal qualities
Social benefits
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DISADVANTAGES
Burden of unlimited liability
Difficulties of expansion
Limited managerial ability
Absence in specialization
Weak bargaining position
Unsuitable for a developing business
• Lack of continuity
• Loss in absence
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ONE MAN CONTROL IS

BEST IN THE WORLD
what is meant by one man control
Statute of one man business

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Is one man control best

in the world????...

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SUITABILITY
• Where market is local.
• When personal contract with customers is
required.
• Where one likes being his own boss.
• Where promptness is required in decision
making.
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PREFERENCE OF SOLE
PROPRIETORSHIP
OVER
OTHER FORMS OF BUSINESS
ORGANIZATIONS

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SCOPE & FUTURE

Ease of formation Flexibility
Promptness in decision- Personal
making satisfaction
Ownership of all profits Ease of
Secrecy dissolution
Low cost organization Personal touch
Credit rating
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SUGGESTIONS TO PROMOTE
SOLE PROPRIETORSHIP
LEGAL PROTECTION
AVAILABILITY OF LOAN
ADVISORY SERVICE
INSURANCE OF BUSINESS
TAX CONCESSION
REBATE IN COST OF PRODUCTION

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