- 10 Marks
BCL – L1 – Q52 – Alternative forms and constitutions of business organisations
Question
It appears that many residents of Kumasi prefer to own their businesses without going through the cumbersome details of forming an incorporated company limited by shares.
Required:
State TWO (2) advantages and TWO (2) disadvantages of forming sole proprietorship.
Answer
Advantages of forming a sole proprietorship:
- Simplicity, inexpensiveness, and ability to legally commence business before the business name registered.
- The proprietor enjoys all the profits.
Disadvantages:
- Obtaining loans and credit to run the business is more difficult for sole proprietorship.
- The owner’s personal liabilities are not distinct from the business liabilities.
- Tags: Advantages, Business structure, Disadvantages, Registration, Sole proprietorship
- Level: Level 1
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