Sole trading concern is a small sized business established and operated by a single owner. It has several advantages or merits such as easy to establish, prompt decision, easy to control, secrecy, flexibility, tax advantage etc.
Sole trading concern is easy to start, operate and close. The owner is the business. There are few legal formalities. The costs of establishing the business are low.
Sole trading concern has the advantage of quick decision. The owner is the manager and he has freedom to make decisions. There is no need to consult others. Quick decision helps quick actions.
Sole trading concern has advantage of full control be the owner. He provides personal supervision. He has total authority and responsibility for business. Effective control is possible over the functioning of business.
4. Secrecy
The owner can keep secrecy about sales and financial performance. He is not required to publish accounts. Auditing is not compulsory. Secrecy helps to face competition. So, sole trading concern has advantage of secrecy. So, high level of privacy is another merit of sole trading concern.
Also Read:
Sole trading concern has advantage of flexibility. The owner can make changes in size and nature of business. Flexibility helps change the business with changing environment.
Sole trading concern provides personal satisfaction to the owner. He is his own boss. He has independence to set his working hours. He is motivated to work hard for more profit.
7. Customer relation
The sole trader develops personal relationship with customers. This helps increase customer loyalty. Customers become life-long customers for business. Customers' complaints can be handled promptly.
Sole trading concern provides tax advantage to the owner. He is taxed as an individual. He can take advantages of various deductions for tax purposes. The tax liability is low in sole trading concern.
Sole trading concern has social benefits also. It creates self-employment for the owner. It creates employment opportunities for helpers in business. It promotes equality in distribution of income and wealth. It leads to development of cottage and small industries. It promotes entrepreneurship in the country for starting new business ventures.
Some of the notable advantages or merits of sole trading concern can be described as follows:
1. Simplicity
Sole trading concern is easy to start, operate and close. The owner is the business. There are few legal formalities. The costs of establishing the business are low.
2. Quick decisions
Sole trading concern has the advantage of quick decision. The owner is the manager and he has freedom to make decisions. There is no need to consult others. Quick decision helps quick actions.
3. Control
Sole trading concern has advantage of full control be the owner. He provides personal supervision. He has total authority and responsibility for business. Effective control is possible over the functioning of business.
4. Secrecy
The owner can keep secrecy about sales and financial performance. He is not required to publish accounts. Auditing is not compulsory. Secrecy helps to face competition. So, sole trading concern has advantage of secrecy. So, high level of privacy is another merit of sole trading concern.
Also Read:
5. Flexibility
Sole trading concern has advantage of flexibility. The owner can make changes in size and nature of business. Flexibility helps change the business with changing environment.
6. Personal satisfaction
Sole trading concern provides personal satisfaction to the owner. He is his own boss. He has independence to set his working hours. He is motivated to work hard for more profit.
7. Customer relation
The sole trader develops personal relationship with customers. This helps increase customer loyalty. Customers become life-long customers for business. Customers' complaints can be handled promptly.
8. Tax advantage
Sole trading concern provides tax advantage to the owner. He is taxed as an individual. He can take advantages of various deductions for tax purposes. The tax liability is low in sole trading concern.
9. Social benefits
Sole trading concern has social benefits also. It creates self-employment for the owner. It creates employment opportunities for helpers in business. It promotes equality in distribution of income and wealth. It leads to development of cottage and small industries. It promotes entrepreneurship in the country for starting new business ventures.
