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CS Executive · Setting Up of Business, Industrial and Labour Laws · Selection of Business Organization

Kavita runs a bakery in Jaipur on her own and values complete control, quick decisions and simple closure. She is not worried about raising large capital. Which factor most strongly supports staying as a sole proprietorship?

Ease of formation, full control and minimal regulatory burden support a sole proprietorship. The owner takes all decisions and can close the business easily. However, the proprietor has unlimited liability and no separate legal existence, so limited liability and perpetual succession are not advantages here.

  1. APerpetual succession of the entity
  2. BEase of formation, full control and minimal regulatory burdenCorrect
  3. CLimited liability of the owner
  4. DAbility to issue shares to the public

Explanation

A sole proprietorship is easy to start and close, the owner has sole control and compliance is minimal. Limited liability and perpetual succession do not apply because the business and owner are legally the same person. Public share issue is not possible for a proprietor.

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