Advantages of soie proprietorship:
1. Easy establishment process:

• One can easily start a sole proprietorship without any documents or passing from any complex laws and procedures.
• Any person, educated or illiterate but having general capabilities can start a proprietorship with minimal capital.

2. Less capital:

Since the proprietorship can be set up even with very less capital it is a very important characteristic and special advantage. Moreover, in case the business needs more capital, the proprietor can even borrow it.

3. Maintenance of secrets:

It is extremely important for a business to maintain its trade secrets. Since the proprietorship is entirely owned and managed by a single person the business secrets can be very well maintained. This again is a special advantage which is difficult to obtain in other forms of business.

4. Quick decisions:

Since the entire business is owned by a single person quick decisions can be made as per the changes in market, demands consumer preference, etc. Such quick decisions helps to save business and even grow faster.

5. Personal contact:

• The reach of a sole proprietorship is generally not very far. Hence, the proprietor is able to maintain personal contact with customers, vendors, etc. This helps him to understand the customers, employees, creditors, etc. better, serve them as per their taste, fashion and demand, etc. and keep them satisfied.
• Based on the opinions of customers and employees he gathers through personal contact he can even change the product or production method or distribution system, etc. and keep the business safe and sound.

6. Flexibility:

The proprietor can easily bring whatever change he wishes to in his business. Authority to decide solely, quick decision making and constant personal contact makes proprietorship highly flexible to change as required,

7. Less burden of tax:

• The income of sole proprietorship can be considered as the income of the owner. Hence, the proprietor falls into the bracket of personal rate of income tax which is lower than other business forms.
• Moreover, generally the sole proprietorship is not very large and so the burden of income tax is also less.

8. Less legal restrictions:

Compared to other business forms there are lesser regulatory and legal controls on the proprietorship firm. The proprietor does not need to take approval from anyone for making changes in his business methods increase or decrease capital etc. Moreover, since the business is small, regulatory controls are also less.

Limitations of sole proprietorship:
1. Limited capital:

• Generally, it is difficult for a sole proprietorship to raise large capital.
• After industrial revolution and with advent of e-commerce the size of businesses have grown and is growing. In such cases it becomes almost impossible for the owners to raise large capital, large space or purchase machinery, raw materials, etc. in larger quantity. As a result, business may not grow much.

2. Unlimited liability:

Sole proprietors cannot free themselves from business liabilities. If their borrowings exceeds their business profits and the proprietors are unable to pay, they will even have to sell their personal assets to repay business debts. In this sense the proprietors have unlimited liability.

3. Short duration:

If the proprietor becomes insolvent or dies or faces some unforeseen event like loss of mental balance or gets involved in some crime, the existence of business comes in danger. In such situations if there are no inheritors of the proprietors or if they do not possess the knowledge to run the business, the business may become weak or even shut down.

4. Limited capacity to work:

• In proprietorship the owner does everything. He formulates policies, he manages funds, he sells and he markets.
• It is a known fact that an individual has got only 24 hours per day to work and a limited set of skills and preferences towards works. Even if the proprietor is highly efficient he will have limited time and knowledge.
• The sole proprietor may lose out the benefit of skills possessed by other persons, opinions and suggestions, etc. and so the growth of business may be limited.

5. Possibility of wrong decisions:

• All the decisions are taken by the proprietor himself. Hence, he does not have the advantage to take help of rich experience and specialized knowledge possessed by others in their own fields.
• This may result in mistakes in business decisions.

6. Lack of advantages of large scale business:

The proprietorship firm generally works on a smaller scale with limited capital and skills. Under such circumstances the businessman cannot get the advantage of large volume or large scale business to earn large profits.