Merits of sole proprietorship:
1) Easy to start and dissolve:
A sole proprietorship can be set up easily and quickly. No legal formalities and expenditure are involved in the establishment of a proprietorship.
2) Motivation to work:
The proprietor alone is entitled to receive all the profits of busi­ness and he alone has to bear all losses. There is a direct relationship between effort and reward.
3) Quick decisions:
The sole proprietor is completely free to take decisions and to imple­ment them. He need not consult others or seek their approval.
4) Independent control:
The sole proprietor enjoys complete freedom of action.
5) Retention of business secrets:
The sole proprietor can keep the secrets of his business to himself. These secrets are not known to competitors or others.
6) Personal contact:
A sole proprietor is in a position to maintain intimate contacts with his customers and employees.
7) Flexibility:
A sole proprietorship is small in size and has a simple management struc­ture.Therefore, it can be adapted easily to suit the changing conditions in the market. The line of business can be easily changed or modified.
8) Economy:
The management of proprietorship is inexpensive. As the proprietor himself is the manager, cost of management is very low. Borrowing capacity is high due to the unlimited personal liability of the owner.