Forms of Business Organisation-1 — OCM STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceOCMForms of Business Organisation-15 Marks
Question
Explain various benefits of Sole proprietorship.
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Answer
Introduction :
Sole proprietorship is very old form of business organization. Businessman is the only owner and manager of his business.
He enjoys certain business privileges related to business.
Benefits/Importance of Sole Proprietorship. They are noted as below :
Simple Procedure of Establishment :
Business under Sole proprietorship does not require to prepare any documents. No special provisions of law are to be followed. It does not require any educational qualifications. Ordinary skilled person too can start business.
Less Capital :
Any person having less capital can start sole proprietorship form of business. If required more money he can borrow from bank or his relatives and invest in his business.
Quick Decisions :
In this type of form of business there is only one owner so he doesn't have to discuss business related matters.
As aresut he can take his own independent decisions without any delay. He is the decision maker. He can change decision with the changing situation of market.
Secrecy Aspect :
Businessman is the owner of his business so matters related to business is never leaked.
He can maintain secrecy regarding his business and accounts.
Personal Contact :
In sole proprietorship business form owner himself manages all minor and major functions of business, so he can maintain direct contact with customers, employees, creditors etc.
Flexibility Related to Business :
Sole proprietary form of business owner maintains and performs all business activities.
He can change decisions very fast according to the need and changing pattern of market.
Less Legal Restrictions :
Compare to other forms of business organizations the size of business in Sole Proprietary form is small so there are comparatively less legal restrictions of government.
This form does not require anybody's consent for capital reduction or increase in capitals.
Less Tax Burden :
In Sole Proprietary form owner is only.
The size of business is comparatively small.
Income is not very big. So taxes are to be paid at individual level.
It falls in lower tax bracket.
Transfer of Ownership :
The business man is the owner in sole proprietorship firm so when he desires, he can transfer entire business to another person.
Conclusion
Due to above mentioned advantages, Sole proprietorship firms are increasing and its existence is maintained along with giant sized business units.
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