Characteristics of Sole Trade Concern

Sole Trading Concern

Sole proprietorship or individual proprietorship is the simplest, oldest and in some respect, the most natural form of business organization in the private sector. In this form a single individual is solely responsible for providing the capital, for bearing the risk and for overall management and control of the enterprise. It is a one-man show owned, managed and operated by one person. According to Professor Henry,” the individual proprietor is the form of business organization at the head of which stands an individual as one who is responsible, who directs its operations and who alone runs the risk of failure.”
Characteristics of Sole Trade Concern

1. Single ownership: A sole proprietorship is wholly owned by one individual. The individual supplies the total capital from which his own wealth or from borrowed funds. The owner has to take every responsibility for all dimensions and transactions of the business.
2. One man control: The proprietor alone takes all the decisions pertaining to the business. He is not required to consult anybody. Ownership and management are vested in a person.
3. No legal entity: sole proprietorship has no legal entity separate from its owner. The law makes no distinction between the proprietor and the business. The assets and liabilities of the business and its proprietor are not different.
4. Unlimited liability: The proprietor is liable for all the debts of the business. In case the assets are insufficient to meet the debts, the personal property of the proprietor can be attached.
5. No sharing of Profit and Loss: The proprietor is all alone entitled to all the profits and the losses of the business. He bears the competitive risk and there is nobody to share the risks, workload or any profit or losses.
6. Small size: The scale of the operation carried out by the sole proprietor is generally small.
7. Risk Bearing: Every business firm has to bear and manage the risks which could affect the business. Here the sole proprietor bear all the risk comes from business.
8. Maintain Secrecy: Sole trade concern is not legally bound to publish financial or any other records, business policy and business strategy so the business secretes can remain with in organisation only. Since the sole proprietor of the business conducts every activity of the business, the owner can keep the business transaction secret for the interest of the business.
9. Independence in decision making: Since there is a single owner of the organisation, he can all the decisions by himself. The owner can get suggestions, feedback and can sit with others but he is the final person to decide based on personal experience/knowledge and capability.
10. limited area of operation: Since the company owned by a single person so this business has limited resources and managerial capacity than other types of business.