Question

What are the limitations of sole proprietorship form of business or organisation?

Answer 1

1) Limited capital: 
In sole proprietorship business, it is the owner who arranges the required capital of the business.It is often difficult for a sole owner to raise a huge amount of capital.The owner's funds and borrowed funds can become insufficient in order to meet the requirements of the business for it's growth and expansion.
2) Lack of continuity:
The continuity of a sole properitorship business is uncertain as the existence of the business is completely linked with the life of the proprietor. Death, illneses, insolvency etc. can lead to the diclosure of the business.
3)Unlimited Liability:
The proprietor of the business is solely responsible for th eobligations of the business as well as the debts arising due to the business activities. If he fails to pay he/she will have to sell his/her private properties, take a loan etc. inorder to meet the liabilities.
4) Limited Size :
In sole proprietorship form of business organisation there is a limit beyond which it becomes difficult to expand its activities. It is not always possible for a single person to supervise and manage the affairs of the business if it grows beyond a certain limit.