SS1: ECONOMICS - 2ND TERM
Firms & Industry | Week 14 Topics
Firms & Industry (Business Organisation) | Week 25 Topics|1 Quiz
Population Theory I | Week 33 Topics
Population Theory II | Week 43 Topics
Population | Week 53 Topics
Population Distribution | Week 64 Topics
Population Census | Week 73 Topics|1 Quiz
Labour Market | Week 83 Topics|1 Quiz
The Nature of the Nigerian Economy | Week 94 Topics|1 Quiz
Agriculture | Week 104 Topics|1 Quiz
Sole proprietorship is a business unit owned by one man. The organization is established, controlled, financed, and owned by one person with the aim of making a profit. It is the oldest form of business. It is also known as sole trading or proprietor.
The Characteristics of a Sole Proprietorship:
- One man business: It is owned by one person.
- Unlimited Liability: The liability of the proprietor is unlimited.
- Limited Source of Capital: The capital used in forming and running the business comes from the proprietor.
- The Motive of its Formation: To make a profit.
- Freedom to take quick decisions.
- Legal Status: The business does not have a separate legal entity, it can’t be sued and be sued in its name.
- Risks: He/she is the only one that bears risk or profit alone.
- Business Nature: The most common type of business unit.
Advantages of Sole Proprietorship:
1. It is very easy to establish because it requires small capital.
2. No formalities and legal processes are required.
3. Decision making is quick.
4. All profit belongs to the owner.
5. There is personal contact with both employees and customers.
6. It survives in any environment.
7. There is privacy in conducting business affairs.
8. It is possible for the sole proprietor to have more than one occupation.
Disadvantages of Sole Proprietorship:
1. Bearing all risks alone.
2. Lack of economics of scale.
3. Lack of credit facility and loans because of the level of rating.
4. The business has an uncertainty of continuity: If the sole trader dies the business may die with him.
5. Limited scope of discussion and policy.
6. Unlimited liability.