Merits of Sole Proprietorship

The sole proprietorship form offers several real advantages, most of which flow from its simplicity and single-owner nature:

1. Easy formation and closure — because there are almost no legal formalities and no compulsory registration, the business can be started with very little difficulty or expense, and can just as easily be wound up whenever the proprietor decides.
2. Complete control — the proprietor has full and undivided authority over the business. He alone decides what to do and how to do it, with no need to consult, persuade or reach agreement with partners or a board.
3. Quick decision-making — since the owner does not have to consult anyone else, he can take decisions promptly and respond to opportunities or problems without delay — a real advantage in fast-changing local markets.
4. Direct incentive and motivation — the proprietor keeps the entire profit for himself. This direct link between his own effort and his own reward gives him a powerful incentive to work hard, control costs and run the business efficiently.
5. Business secrecy — because he need not share information with partners and need not publish his accounts, the proprietor can keep his business secrets — such as trade methods, sources of supply and profit margins — entirely to himself.
6. Personal touch with customers — running the business himself, the proprietor comes into direct personal contact with his customers. He can understand their tastes and needs, offer personalised service, and build lasting goodwill and loyalty. …