Short Answer Questions · Q5
Q.State any two merits of Sole Proprietorship.
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✓ Free question
Sole Proprietorship offers several genuine merits to the person who owns and runs it. Two of the most important are:
- Easy to form and close — starting a sole proprietorship generally requires very little legal formality, and the owner can wind it up just as easily whenever he or she chooses, without needing anyone else's consent.
- Direct motivation — because the sole proprietor keeps the entire profit earned by the business (there is no partner or shareholder to share it with), there is a strong personal incentive to work hard, control costs, and manage the business efficiently.
Other merits also exist, such as quick decision-making, flexibility of operations, and the ability to keep business affairs confidential, but easy formation and direct motivation are usually the first two cited.
✓Final answer
Two merits of Sole Proprietorship: easy formation and closure, and direct motivation from keeping the entire profit.
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