Mr.ravi runs a small shop in a market.what merits will be there in this sole proprietorship from of organization?
Answers
Answer:
The merits of Sole properitorship are:-
1. Ease of formation and dissolution -The sole proprietorship is the simplest form of business ownership. There is hardly any formality involved in setting up this type of organization. This ownership organization is not governed by any special Act.
2. Simplicity of operation and flexible management- A sole trader need not consult anyone, refer to others, discuss with anybody, or take the opinion of any person, before he decides the affairs of his organization. In addition to this, the owner is not required to submit the results of the business to the prescribed authorities. Quick decision and prompt action enable him to take advantage of business opportunities.
3. Sole claim on profits- The sole trader is the only person to whom the profits belong. This always acts as a stimulant to personal incentive.
4 Preferential treatment by Government- Not only that it is free from government regulations, it also gets subsidies, concessions, and a host of facilities from the government being socially useful, it gets loans on concessional rates, liberal repayment schedule, etc.
5 Favourable credit standing-Since the owner is personally liable for all debts of the proprietorship, this form often enjoys a favorable rating among creditors. When creditors know that a proprietor has valuable personal assets, they can anticipate satisfaction from these sources if the business fails or debts remain unpaid.