Sole Proprietorship refers to a form of business organisation that is owned managed and controlled by an individual's who is the recipient of all profits and bearer of all risk.

Merits:

i. A sole proprietorship can quickly decide as it enjoys a considerable degree of freedom.

ii. There is hardly any legal formality for setting up a sole proprietorship firm.

iii. There is a sense of accomplishment in working.

iv. A sole proprietorship is the recipient of all profits earned from business and this motivates others to carry out their business efficiently.

Limitation

i. Resources of a sole proprietor are limited because of the lending institutions that hesitate to extend long term loan

ii. There is a limited expectancy of business as a sole proprietor is responsible for everything including death and it may lead to the closure of the business.

iii. The creditors might recover its dues from the personal assets of the sole proprietor if possible.