what are the limitations of sole proprietorship form of business organisation? 40 to 60 words
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1) Limited Capital :
In sole proprietorship business, it is the owner who arranges the required capital of the business. It is often difficult for an individual to raise a huge amount of capital.
2) Unlimited Liability:
If sole proprietor fails to pay the business obligations and debts arising out of business activities, his personal properties may have to be used to meet those liabilities.
3) Lack of Continuity:
The existence of sole proprietorship business is linked to the life of the proprietor.Illness, death or insolvency of the owner brings an end to the business.Therefore the continuity of business operation is uncertain.
4) Limited Size:
In this type of business, there is a limit beyond which it becomes difficult to expand its activities.
5) Lack of Managerial Expertise:
A sole proprietor may not be an expert in every aspect of management.
In sole proprietorship business, it is the owner who arranges the required capital of the business. It is often difficult for an individual to raise a huge amount of capital.
2) Unlimited Liability:
If sole proprietor fails to pay the business obligations and debts arising out of business activities, his personal properties may have to be used to meet those liabilities.
3) Lack of Continuity:
The existence of sole proprietorship business is linked to the life of the proprietor.Illness, death or insolvency of the owner brings an end to the business.Therefore the continuity of business operation is uncertain.
4) Limited Size:
In this type of business, there is a limit beyond which it becomes difficult to expand its activities.
5) Lack of Managerial Expertise:
A sole proprietor may not be an expert in every aspect of management.
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The main disadvantages to being a sole proprietorship are: Unlimited liability: Your small business, in the form of a sole proprietorship, is personally liable for all debts and actions of the company.
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