Pros and Cons of Sole Proprietorship Concern, As we all know that the concept of Sole Proprietorship is been decreasing day by day as corporate world is taking place of sole proprietorship concern. As there are many disadvantages of having a sole proprietorship concern, there some crucial advantages too. There may be different point of view on the same topic but universal view will be clear from this article. This article basically talks about the advantages and disadvantages of Sole proprietorship concern.

What is Sole Proprietorship Concern ?

The word “Sole” itself indicates the meaning of the word Sole Proprietorship concern, i.e. Individual/One Person. Here there would be only One person who would be the owner of the concern or enterprise and would take profits home if there are and will be bear losses individually if there are. Here the owner has to bear all the risks and bring the money to the business to invest or to buy raw materials which can be by way of loan or capital.

Pros of Sole Proprietorship Concern

  • The starting of the sole proprietorship from the legal point of view is easy than other form of business such as company or partnership firm as it involves less process for registration.
  • Control in all your hands. The sentence means that you are the only person to control the whole business, may it be production control or employee control or cost control or anything else.
  • The decision making is in your hand so you would be taking the decisions very fast and accurate. As there is no other person in this concern, difference of opinion will not arise and your decision would be full and final.
  • The ultimate motivation that you are the only person to run and the profit arising from the concern would also be yours, so it motivates you to work for yourself and achieve it by earning more and more day by day.
  • The confidentiality will be maintained very much carefully as the secrets of the business will be known to you only and there is no else to which you are required to tell the secret decisions or information which makes you self responsible person.
  • The flexibility is another outcome which comes through the process of starting this concern. You will be able to work on your timings and would be in hurry to reach some place and came manage the same in case of emergencies.
  • The rules and regulations regarding the sole proprietorship are very less and thus the procedural part becomes very much easy in case of such concern.
  • The tax benefits available to the sole proprietorship concern are the same as they are for the individual which makes them available to take the benefits of the deductions of some expenditures made.
  • The dissolution or making the concern stop becomes more simpler and easier as there are no other stringent provisions for the closure of the same.

Cons of Sole Proprietorship Concern

  • The first and the major drawback for the sole proprietorship concern is that there are limited resources through which they need o conduct the business, which stops them to expand the business as there are many risks involved in the same.
  • The liabilities of the promoters or the owners is not limited and hence will have to bring as much as assets or money as they need to pay to the creditors or to the lenders in case of default.
  • There is always exception to the skills the person has. Every person has some unique skill but everyone does not have every unique skill. So they would be expert in each and every case so they need to hire people in each expert field and make them understand the vision and mission of the concern.
  • There would be less scope to expand the business as the resources are very much less.
  • There may be liquidity issues in the concern which may have to solved out by the owner itself and through only some limited modes, which would increase in difficulty in raising the funds.
  • The continuity issue may arise upon the death of the owner, which means as there would be death of the owner there would be no business, there does not arise separate legal entity where else it would arise.


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