INTRODUCTION: Sole trading concern is the oldest form of commercial organisation. Sole means one person. So a sole trading concern is an organization where all business activities are controlled and managed by one man. He is also solely responsible for the debt and risk of the firm.Definition: “A sole trader is a person who trades on his own account rather than in partnership or as a member of a company.” (Michael Greener). The following are some of the features of a sole trading concern.
1. Single ownership
2. Unlimited liability
3. Limited government control
4. Business secrecy
6. No sharing of profit and losses
7. No Legal status
THE ABOVE IMPORTANT FEATURES ARE EXPLAINED BRIEFLY DETAIL IN UNDER
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.