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Wednesday, 17 April 2013

Sole Proprietorship and partnership


Sole Proprietorship:
Definition
Sole Proprietorship is that type of business which is owned by one person.
Advantages of Sole Proprietorship
Freedom in formation
The easiest to establish
Individuals are allowed to decide without interference of any other person.
Easier to transfer the ownership of the business
People wholly solely enjoy the ownership of the business and profits
Individual has unlimited opportunity to expand the size of the business
Individual can keep the secrets of the business intact
Individual has personal interest in the business
Owners can make speedy decisions
Easy to dissolve
Disadvantages of Sole Proprietorship
Limited amount of capital
Continuity problem
Sole Proprietorship has limited life and is dependent on the owner
Owner of the business has unlimited liability towards people whom he has to pay
Partnership
A relationship of the people to share investments and profits
Partnership act 1932 governs all affairs of the partnership
Advantages of Partnership
More capital
Relatively easier to form
Sharing of responsibility
Light credit standing
Business can have more loan from various sources
Secrecy Public Confidence
Better Decision
Easy to dissolve

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