Question

Write short note on the following.
Merits of a proprietorship

Answer 1

Merits of a proprietorship:
i. Ease of formation and closure: There are hardly any legal formalities required while forming and shutting down a sole
proprietorship firm; hence, its formation is relatively easy.
ii. Quick decision making: A sole proprietor enjoys complete control over the business. This makes the decision-making
process quick and easy.
iii. Minimum government regulations: There is minimum interference by the government, as this business form is not
governed by any laws and acts.
iv. Direct incentives: The profits and losses wholly belong to the proprietor. Hence, he/she enjoys direct incentives for
operating the business.
v. High degree of flexibility: There exists a high degree of operational flexibility, as all the decisions are taken by the
proprietor alone. Thus, for any variation in business plans, the proprietor enjoys complete flexibility.
vi. Secrecy of information: In a proprietorship firm, all the decisions are taken by the proprietor; therefore, he/she retains
maximum business-related secrecy.