Concept and 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 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. In is the 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
- 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.
- 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.
- No legal entity: sole proprietorship has no any 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.
- Unlimited liability: 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.
- No profit sharing: The proprietor is all alone entitled for all the profits and the losses of the business. He bears the compete risk and there is nobody to share the risks, workload or any profit or losses.
- Small size: The scale of operation carried out by sole proprietor is generally small.