Question

State the features of proprietorship.

What are the features of sole proprietorship? (any three)

Describe sole proprietorship features.

Answer 1

The following are some of the important features of a proprietorship:

1. Easy formation and closure: A proprietorship requires no legal formalities for its formation and closure. Thus, it is easy to start up a sole proprietorship business.
2. Unlimited liability: A sole proprietor has unlimited liability. This implies that the personal assets of the proprietor can be used if the business assets fail to pay off the debts.
3. Secrecy: A sole proprietorship is not required to publish its accounts. This enables the proprietor to maintain complete secrecy regarding the business.
4. Suitability: A sole proprietorship model is suitable for businesses that require modest capital, personal attention, and limited managerial skills.
5. Single ownership: A sole proprietorship is owned by an individual. As the sole owner of the business, he/she is solely responsible for all the decisions made and the consequences thereof.
6. Risk bearing: A sole proprietor is the sole bearer of all the risks associated with the business. He/she is also the single recipient of all profits and losses earned by the business.