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Kiran is a sole proprietor. Over the past dacade, her business has grown from operating a neighbourhood corner shop selling accessories such as artificial jewellery bags, hair clips and nail art to a retail chain with three branches in the city. Although she looks after the varied functions in all the business. She is wondering whether she should form a company for better management of the business. She also has plans to open branches countrywide.
(a) Explain two benefits of remaining a sole proprietor.
(b) Explain two benefits of converting it to a joint stock company.
( c ) What role will her decision to go nationwide play in her choice of form of the organisation?
(d) What legal formalities will she have to undergo to operate business as a company?

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(a) Two benefits of remaining sole proprietor are
(i) Sole beneficiary of profits
(ii) Personal touch
(b) Two benefits of converting in joint stock company are:
(i) Large amount of capital
(ii) Limited liability
( c ) If she plans to go nationwide then she will have to manage her form of business from sole proprietorship to joint stock company
(d) If she plans to operate as joint stock co., she will have to complete many legal formalities such as:
(i) getting certificate of incorporation
(ii) getting certificate of commencement of business, if she plans to operate as public ltd. co
(iii) appoint professional experts, brokers, who charge high fees.
(iv) prepare various documents such as: Prospectus, Memorandum of Association, Articles of Association etc.

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