Features of sole trading concern

Form of business organisation

Oc-1

Q-features of Sole trading concern.

Answer:-

• Introduction:-It is that concern which is owner, manager, controlled and invested by a single person. Hence, it is called sole proprietorship or individual by a single person. Hence, it is also proprietorship or individual proprietorship.

• Meaning:- sole means single and proprietor means seller therefore,sole trading concern refers to private form of organization owned and manage by an single seller.

• Definition:-  According to prof. James L. Lundy 

"The sole proprietorship is an informal type of business owned by one person "

• Features:-

• 1. Single ownership: The sole trader is a single owner of the organization. The sole trader owns all the assets and property of the business. The sole trading concern is often referred (said) as “one man show”

• 2. Unlimited liability: The liability of the sole trader is unlimited. This means he is alone responsible for all the risks and debts of the firm.

• 3. Minimum government control: Sole trading concern is less affected by government control. This is because, there are almost no legal formalities are required to start or close down a business.

• 4. Business secrecy: The sole trader can maintain complete business secrecy. He needs not to publish any accounts and reports to any body. Competitors cannot easily get business secrets and information of the sole trader’s activities.

• 5. Flexibility: Sole trader enjoys maximum flexibility. He can take right decision at the right time depending upon the situation. At any time, he need not have to consult with anyone because he is a single owner of his business.

• 6. No sharing of profit and losses: There is a direct relationship between efforts and rewards. This results in best possible efforts on the part of sole trader. Therefore, he can enjoy all the profits of his business.

• 7.Legal status: - Legally, the sole trader and his business concern are one and the same in the eyes of law. The sole trader and his business cannot be separated from each other. So the sole trader lacks legal status.

• 8.Ease in formation: - a sole trading concern is considerably easy to start and to conduct its activities. There are least formalities in the formation of a sole trading concern. A sole trader may also close down the business as per his own will.

•  9.Complete control: - The sole trader can have complete control over business operations. He can take his own decision regarding the business activities. No need to consult with any one.

• 10.Business Secrecy: - The sole trader can maintain complete business secrecy. He needs not to publish any accounts and reports to any body. Competitors cannot easily get business secrets and information of the sole trader’s activities.

• 11.Flexibilityin operation: - Sole trader enjoys maximum flexibility. He can take right decision at the right time depending upon the situation. At any time, he need not have to consult with anyone because he is a single owner of his business.

• 12. Close conduct with the customers: -The Sole trader can develop close contacts with his customers. This is because; he deals regularly with the customers. By developing personal contacts with his customers, the sole trader can come know the likes, dislikes, preferences and tastes of the customers. This helps to increase the sales turn over.

• 13. Proper utilisation of resources: -The sole trader will make proper utilisation of resources (men, money, materials, etc.) this is because, the sole trader enjoys all the profits.

Note- 1) 6 point for 5 marks.

              2)10 point for 10 marks.
              3)for long answer definition is                           compulsory.
              4) Right diagrams if any.

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