Characteristics Of Sole Trading Concern

A sole trading concern is individually owned business which has several features or characteristics such as one-man management, no legal entity, unlimited liability, small size and limit operation etc.

Some of the main characteristics of sole trading concern can be describes as follows:

1. Individual ownership

Individual ownership is the main characteristic of sole trading concern. It 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

High level of secrecy is another characteristic 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.

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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