NECO Economics 2013 Theory — Question 8

Model answer

A sole proprietorship is a type of business organization owned, financed and managed by one individual for the purpose of making profit. It is also known as one-man business, individual proprietorship, or sole trading. It is the simplest form of business structure and requires no formal legal process to set up. A partnership, however, is a business organization where two or more individuals come together to carry on a business with the intention of sharing profits and losses. In a partnership, more capital is available through the admission of new partners, giving greater possibility of expansion, unlike a sole proprietorship, which is limited to one owner's capital and skills.