10 Advantages of Sole Proprietorship

Meaning of Sole Proprietorship Business

Sole proprietorship is termed as one man business. It is a form of business organization which is managed & controlled by one man. It is one of the simplest & common types of business.

There are several persons working in this business but there is only one owner. The sole gowner is the only person who manages the whole business. He has unlimited liability for business losses & debts. Even Owner private property can be used for paying business losses & debts.

Whole profit or loss of business is shared by a single person. Sole proprietorship businesses need to follow fewer formalities as compared to other forms of business organizations.

Advantages of Sole proprietorship business are as follows:

10 Advantages of Sole Proprietorship

Advantages of Sole Proprietorship
Advantages of Sole Proprietorship

Single Owner

This is one of the important advantages of the sole proprietorship business. Here one person has full control over the business. There are other persons working in these businesses but the owner is one only.

He himself manages & controls the affairs of business. He can easily take decisions without anyone’s consultation in less time. Sole trader can take all the decisions as per his interest.

Easy to set up

Sole proprietorship business is the easiest type of business to set up. These businesses need to follow very fewer formalities. The government imposes a minimum restriction on sole proprietorship businesses.

Permits & Licenses for this business can be easily attained. A person can easily start a small business as per his budget & can become a sole proprietor.

No profit-sharing

One of the major advantage of sole proprietorship is that profits are shared only by sole owner. Profit are not shared by other persons working in an organisation.

Other persons working there are paid salaries, wages & charges as per their work. However, sole owner need to bear the full risk of business for enjoying full profit benefit.

High Privacy

There is high secrecy in sole proprietorship type of business. In this type of business, there is only one person who manages the whole business. All secrets & affairs of business are known to him.

There is no chance of leakage of business secrets to competitors. This privacy enables to compete easily with competitors to attain an advantage.

Advantage of Tax

Sole proprietorship business enjoys tax benefits. There is no possibility of double taxation like other business in these businesses. All the earnings of the business are taxed as the personal income of the owner. Here the whole income is taxed only once.

Less capital required

The fund required for starting a sole proprietorship business is very low. The sole owner can invest as per his budget. This business requires less legal expenses & corporate tax. The business can be started either with no employees & or small number of employees as per need. It helps in controlling expenses of the business.

Direct interaction with customers

This is one of important advantage of the sole proprietorship business. This feature helps to maintain long term & good relation with customers. Seller meets directly with their customers in this type of business. It helps in better understanding their demand & serving them better.

Provides employment opportunities

Sole proprietor engages several other persons in his business. There are different persons who are working in sole proprietorship type of businesses. These businesses, therefore, provide employment to many persons. It helps in removing poverty & helps in improving economic conditions of country.

Social Benefits

Sole proprietor runs business & works for the welfare of society. He takes various initiatives through his business for society like education, medical, transport etc. Whenever a new business came into existence, it brings several benefits for the people of that area. It helps in improving skills like self-determination & self-reliance of proprietor.

 Easy in Dissolution

Sole proprietorship business is very easy to dissolve at any time. There are very less formalities to be followed at the time of winding up of these businesses. There is a single owner in this business who need not to consult with any other person before winding up. He runs the business as long as he wishes to. 


Search an Article