Q2. What are merits of sole proprietorship firm.
Ans. Merits are:
- Quick Decision Making: A sole proprietor enjoys freedom in making decisions of business. Decision making is prompt because there is no need to consult others.
- Confidentiality of Information: It enables proprietor to keep all information related to business-confidential and maintain secrecy. A sole trader is not bound by law.
- Direct Incentive: A sole proprietor directly reaps benefits of his/her efforts of all profits. This provide max incentive to sole trader to work hard.
- Sense of Accomplishment: There is personal satisfaction involved in working of oneself. The knowledge that one is responsible for success of business not only contributes to self satisfaction but also insists in individual a sense of accomplishment.
- Ease of Formation and Closure: The possibility of entering into business with minimal legal formalities. There is no separate law that governs sole proprietorship. It is easy to governs sole proprietorship. It is easy to start and close business as per with of owner.