Write short notes on the following. Features of a proprietorship

ANSWER:

Features of a proprietorship:

i. Easy formation and closure: This form of organisation requires minimum legal formalities while forming and closing down the business.

ii. Unlimited liability: A sole proprietor has unlimited liability; this implies that the personal assets of the proprietor can be utilised in case the business assets fall short of debt obligations.

iii. Direct incentives: As the sole proprietor enjoys all the profits and bears all the risks and losses associated with the business, he/she gets direct incentives while running the business.

iv. Single ownership: It is managed and controlled single-handedly by the proprietor only.

v. Secrecy of information: In a proprietorship firm, all the decisions are taken by the proprietor; therefore, he/she retains maximum business-related secrecy.

vi. Minimum government regulations: As a sole proprietorship firm is not governed by any laws and acts, there is minimum government interference in its operations.