A sole trading concern has the following characteristics:
Sole trading is owned by an individual. It has single ownership. The owner invests entire capital, that may be his private capital or loans from bank or relatives.
Sole trading concern is a one man show. The owner himself manages it. He makes all the business decisions. He formulates plans and control business.
Sole trading concern has no legal entity. The owner and the business are one and the same. All business activities are done in the name of the owner. He has individual accountability.
Also Read: Merits Of Sole Trading Concern
The sole trader has unlimited liability. He is personally liable for business debts. His individual property can be used to pay liabilities.
The sole trader takes all the risks. He bears all losses and receives all profits. This motivates owner to work hard.
Sole trading concern is of small size. The scale of operation is small. It is suitable for small and cottage industries.
Also Read: Demerits Of Sole Trading Concern
Sole trading concern has limited operations. It is confined to local areas. The operations are limited by capital, management skill and time of owner.
Sole trading concern is subject to few legal formalities. It is easy to start. But it must obey the laws. It is subject to minimum government regulations.
Also Read: Concept And Meaning Of Sole Trading Concern
It is easy to maintain secrecy in sole trading. The owner himself makes all the decisions. He is not required to publish the accounts. He keeps all the business secrets to himself. Secrecy helps sole trader to face competition.
1. Individual ownership
Sole trading is owned by an individual. It has single ownership. The owner invests entire capital, that may be his private capital or loans from bank or relatives.
2. One-man management
Sole trading concern is a one man show. The owner himself manages it. He makes all the business decisions. He formulates plans and control business.
3. No separate legal entity
Sole trading concern has no legal entity. The owner and the business are one and the same. All business activities are done in the name of the owner. He has individual accountability.
Also Read: Merits Of Sole Trading Concern
4. Unlimited liability
The sole trader has unlimited liability. He is personally liable for business debts. His individual property can be used to pay liabilities.
5. No profit sharing
The sole trader takes all the risks. He bears all losses and receives all profits. This motivates owner to work hard.
6. Small size
Sole trading concern is of small size. The scale of operation is small. It is suitable for small and cottage industries.
Also Read: Demerits Of Sole Trading Concern
7. Limited operations
Sole trading concern has limited operations. It is confined to local areas. The operations are limited by capital, management skill and time of owner.
8. Few legal formalities
Sole trading concern is subject to few legal formalities. It is easy to start. But it must obey the laws. It is subject to minimum government regulations.
Also Read: Concept And Meaning Of Sole Trading Concern
9. Secrecy
It is easy to maintain secrecy in sole trading. The owner himself makes all the decisions. He is not required to publish the accounts. He keeps all the business secrets to himself. Secrecy helps sole trader to face competition.
10. Lack of stability
Sole trading concern lacks stability. The business ends when the owner closes the business, dies or becomes insolvent.
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