Question

State advantages and disadvantages of Sole proprietor.

Answer 1

Answer:

Explanation:

Sole proprietorships have several advantages over other business entities. They are easy to form, and the owners enjoy sole control of the business profits. However, they also have disadvantages, the biggest of which being that the owner is personally liable for all business losses and liabilities.

Answer 2

State advantages and disadvantages of Sole proprietor.

Explanation:

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Advantages of Sole proprietor.

• Ease of Establishing  : This style of business set up does not have to undergo any specific registration procedure. The legal identity of the proprietor is enough to commence such business for example the Adhaar card and PAN of the proprietor.

• Ease of Operation: As the concern is run on the decision of only one person, decision making is easier and one does not have to rely on others to consult.

• Sole owner of Profits : Since it is single owned  business, the proprietor enjoys the entire profits of the firm.

• Ease of Compliance & Taxation : Sole proprietorship firm enjoys minimal of compliance and taxation.

Disadvantages of Proprietorship

Liability is unlimited:  Under this arrangement if the firm incurs loss , the proprietor has to meet the liabilities which may also include selling off his/her personal assets if the need arises to discharge the liabilities.

Availability of Funds  : Obtaining additional fund to expand such firm is always a difficult proposition. The financial institution are reluctant in providing huge sum of loan to it as the existence of such firm relies on its proprietor.

Taxation is on the higher side  : A Proprietorship firms has to pay taxes similar to that of an individual. That means it is based on slabs like an individual. For example if a firm earns more than 10 lakhs it shells out more on account of taxes than a company and also does not enjoy certain tax concession like a company does.

Hope this helps.

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