Sole Trading Concern Sole Prorietorship

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SOLE TRADING CONCERN SOLE PRORIETORSHIP In a sole trading organization an individual provides capital, uses his own skill and ability and is solely by responsible for the results of business operations. All the profits of business are enjoy by him and all the losses are suffered by him alone. The features of sole trading Concern are:(a)

It is promoted and formed by an individual who contributes towards its capital all on his own.

(b)

The Individual who contributes capital also manages the business.

(C)

He bears all the risks of business.

(d)

He enjoys all the profits and suffers all the losses of business by himself.

(e)

It in one of the oldest and simplest form of business.

(f)

lt can be easily formed.

(g)

There is flexibility in this form.

Advantages of Sole Trade Concern. (a) Easy Formation : Formation of sole trading concern does not involve lengthy legal formalities. Because of this it can be formed easily and quickly. (b) Business Secrecy: Since the business is managed by a single man business secrecy can be maintained. Moreover he need not publicise his activities through accounts or reports. (c) Personal devotion.: The owner and manager of a sole trading concern Is the same person. Sine there is direct relationship between effort and reward the sole trader devotes more time and attention to business. (d) Quick decision and prompt action. : Since the decisions regarding business are taken by a single person, the decision are promptly taken and executed. (e) Flexibility.: A sole trader can expand, contract, modify or adjust his business according to the needs of time and environment. (f) Personal touch.: Since the sole trader handles all the areas of business himself, he develops personal rapport and understanding with customers suppliers, government authorities and public, which will benefit him In the long run.

OMTEX CLASSES THE HOME OF TEXT AAMINOMTEX

(g)

(h)

Economy In Business Management:-: The managerial expenses will be the least in a sole trading concern because It Is a one man organisation. Limited government control : Compared to the other forms of organisations a sole trading concern Is subjected to least government regulation and control, In the ar.8s of phonation, management, expansion and dissolution.

DISADVANTAGES OF SOLE TRADING CONCERN:(a)

Limited Capital :- The capital is limited since it is contributed by a single person. This affects expansion of business.

(b)

Limited Managerial Skill:- There is a limit to education, knowledge1 skill, exposure and ex-ence of a sole trader. He is not an expert in all the fields of business. Thus he is handicapped In certain areas of business or beyond a particular stage of growth.

(c)

Unlimited liability:- He is solely personally liable for all the losses of the business. This kills dynamism in business activities.

(d)

Lack Of Continuity :- The business of a sole trader is unstable because It is likely to be affected by death, insolvency, insanity or physical disability of the trader.

(e)

Absence of economies of scale :- A sole trader cannot enjoy the economies of large-scale purchasing and selling due to limited capital and limited size of operations. His bargaining capacity is also weak

SUITABIUTY OF A SOLE TRADING CONCERN:A sole trading concern is suitable under the following circumstances: (a)

If the business operations are carried out In the local market.

(b)

If the risks involved in business are limited.

(C)

If the business requires limited capital.

(d)

If personal attention is required to be given to customers.

(e)

If the quick decisions are to be taken in business.

(f)

If the business is simple enough to be managed.