explain merits and demerits of sole proprietorship
Answers
Answer:
merit
1,since the liability of sole trader is unlimited bank are willing to give loan
2,sole trader is a single decision maker in his business because of this he can change his decision fast according to change in circumstances
3,he can maintain good relation with its coustomer
4,he gets all profits of the business since he is the only risk taker in the business
Explanation:
demerits
1,unlimited liability because of this his personal asset of owner can be used to discharge business liability if business asset are not enough
2,scope of sole trading is limited
3,capital formation is low in sole proprietorship since there is limited source to raise funds
Easy to start and close: It can be easily started and closed without any legal formalities. Quick decision making: As sole owner is not required to consult or inform anybody about his decisions. Secrecy: He is not expected to share his business decisions and secrets with anybody.