Main drawbacks or disadvantages of sole proprietorship / sole trading concern can be expressed as follows:
1. Limited Amount Of Capital
In sole proprietorship, it is difficult to raise capital to fund in business. So, future expansion and large scale production is not possible due to the lack of adequate capital.
2. Personal Liability
Sole trader is solely liable for the debts and liabilities of the business because there is no separate legal entity between the owner and the business. So, proprietor's assets are always at risk.
3. Uncertainty
Life of sole trading concern is uncertain and limited. Business will end in case of death or disability of trader.
Due to small size and limited area of operation sole proprietorship lacks division of labor both in operating level and managerial level.
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5. Unsuitable For Large Scale Operation
Sole trading concern suffers from inadequate capital and limited managerial skills. So, it is not suitable for large scale operation.
