Types of Trees

Q. 3. What are the features of sole trading concern?

Ans: Following are the important features of sale proprietors:

1) Membership: In sole trading concern minimum and maximum membership is only one. This business is owned, managed and controlled by only one person known as Sole Trader. He is the owner, manager and controller of his business.

2) Self-financing: In sole trading concern the sole trader invests his own savings in the business. He may borrow money from friends and relatives. He may also take loan from the bank. In short, all finance is provided by sole trader himself.

3) Single ownership: In sole trading concern all business properties are owned by Only one person is. sole trader. He uses his own capital to start and run the business. He is the only owner of his business.

4) Unification of ownership and management: In sole trading concern there is Unification of ownership and management. The owner and the manager are one and the l3ame person. The sole trader himself is the owner and the manager of his business.

5} No Sharing of profit or losses: In sole trading concern the sole trader uses his own money to alert and run the business. He uses his own skill to manage the business. So he alone enjoys all the profits and he alone beers all the losses of his business.

6) Local market: Sole trailer has limited capital, limited managerial skill and limited risk bearing capacity Due to this. he operates in local market. He cannot expand his business beyond local market.

7) Limited government control: Government control on sole trading concern is limited The formation and working of sole trading concern are free from government control. There is no specific law to control sole trading concern. Registration of sole trading concern is not compulsory.

8) No Separate legal status: Sole trading concern does not enjoy separate legal status. As per law. sole trading concern and sole trader are one and the same. They are not separate from each other.

9) Lack oi continuity: Sole trading concern does not enjoy long, stable and continuous life. Its continuity is effected by death, insolvency or insanity of sole trader. The life of solo trading concern depends upon life of sole trader.

10) Unlimited liability: The liability of sole trader is unlimited. When business liabilities are more than business assets then the sole trader has to sell his personal property to pay his business liabilities. The law does not make difference between business property and personal of sole trader.