Proprietorship

Ease of formation is its most important feature because it is not required to go through elaborate legal formalities. No agreement is to be made and registration of the firm is also not essential. However, the owner may be required to obtain a license specific to the line of business from the local administration. The liability of the proprietor is unlimited i.e. it extends beyond the capital invested in the firm.

Advantages of Proprietorship 

• Ease of formation
• Maximum incentive for work
• Secrecy of business
• Quick decisions and flexibility of operations

Disadvantages of Proprietorship 

• Limited capital
• Limited managerial ability
• Limited life
• Unlimited liability

This form of organization is suitable for the businesses which involve moderate risk, small financial resources, capital requirement is small and risk involvement is not heavy like automobile repair shops, small bakery shops, tailoring, etc. It accounts for the largest number of business concerns in India.