Features of Sole Trading Concern?



Introduction: - Sole trading concern is popular not only in India, but also in foreign countries also. Sole trading concern is the oldest and simplest form of commercial organization having one owner. Sole means one person, so a sole trading concern is an organization where all the business activities are controlled and managed by one man. And he is also solely responsible for the all the debts and risk of the firm.

Definition: - The sole proprietorship is an informal type of business owned by one person”.
(Prof. James L. Lundy)

The following are some of the features of a sole trading concern

1.      Minimum Government Regulations: - There are minimum government regulations on the activities of a sole trader. Proprietary concerns are not governed by any separate law and  are easy to form, because no rigid legal formalities has to be followed for either forming, running or closing down the organization.

1.       Unlimited Liability: - The liability of a proprietor is unlimited. The liability of the sole trader can be more than the capital invested by him. Unlimited liability means, there is no distinction between his personal and private property and the property of the business. This means he is alone responsible for all the risks and debts of the firm.


2.      Freedom in selection of Business: - A sole trader can select any business as per his desire. There is no restriction on the type of business, which may be conducted by the proprietary concern. Any method of keeping books of accounts may be followed by him. Generally sole traders in India adopt Single Entry system of book-keeping.

3.      Secrecy: -Secrecy plays an important role in the sole trading concern. The information about all the important matters concerning the business rests only with the owner and no outside party can take undue advantage out of it.

4.      Individual Ownership: - Sole trader is the sole owner of all the assets and resources of business. There is no other person who shares in the profit or loss of the sole trading concern.

5.      Direct contact with customers and Employees: - Since the proprietor usually deals directly with his customers and employees, he can maintain good relations with his employees and provide personal attention to his customers.



6.      Suitable for some special business: -There are some special business and trade which require individual attention and service and can only be started as a sole trade for example, beauty parlour, Cake shop and Agricultural products.



7.      No sharing of Profit and risk: -A proprietor gets all the profits of the business concern and assumes all the losses and risks involved I business. There is nobody to share in his profit and losses.