MGT211

Introduction to Business

Lecture 03

Definition

Sole Proprietorship is that type of business which is owned by one person.

Advantages of Sole Proprietorship

Freedom in formation The easiest to establish Individuals are allowed to decide without

interference of any other person. Easier to transfer the ownership of the

business People wholly solely enjoy the ownership of

the business and profits

Advantages of Sole Proprietorship

Individual has unlimited opportunity to expand the size of the business

Individual can keep the secrets of the business intact

Individual has personal interest in the business

Owners can make speedy decisions Easy to dissolve

Disadvantages of Sole Proprietorship

Limited amount of capital Continuity problem Sole Proprietorship has limited life and is

dependent on the owner Owner of the business has unlimited liability

towards people whom he has to pay

Partnership

A relationship of the people to share investments and profits

Partnership act 1932 governs all affairs of the partnership

Advantages of Partnership

More capital Relatively easier to form Sharing of responsibility Light credit standing

Business can have more loan from various sources

Secrecy

Advantages of Partnership

Public Confidence Better Decision Easy to dissolve