Q. 4. What are the merits (advantages) of Sole Trading concern?

Ans: Following the merits or advantages of sale trading concern:
1) Easy formation: Formation of sole trading concern is very easy. It is free from complicated legal formalities. Registration of sole trading concern is not compulsory. Any person can start business under sole trading concern.
2) Flexibility: Sole trading concern enjoys flexibility. Sole trader can make changes as per business requirements easily. He can start, change or close his business at any time without much legal formalities.
3) Business secrecy: Success of business depends upon secrecy. Sole trader can maintain maximum business secrecy. All business activities are managed by sole trader himself. All business secrets are known to sole trader himself. It is not necessary for ole trader to publish his books of accounts and business records.
4) Personal contact with customers: Sole trader deals with local customers. He knows their likes, dislikes and adjusts his business accordingly. He provides facilities like free home delivery. credit facility, etc. to his customers. Due to personal contact with customer’s sole trader gets regular customers.
5) Good relations with employees: Due to small size of business sole trader can maintain good relations with his employees. He personally looks after their problems and difficulties and tries to solve them immediately. Due to good relations he gets voluntary cooperation from his employees which is very important to make the business successful.
6) Quick decision and prompt action: Profitability of business depends upon quick decision and prompt action. Sole trader can take quick decisions and prompt actions. He is the only owner of his business. While taking decisions he need not ask anyone.
7) Direct motivation: In sole trading concern there is direct relationship between warts and rewards. Sole trader knows that it he works hard he will enjoy more profit pin it he does not work hard he will bear loss. This motivates sole trader to work hard.
8) 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 at sole “ailing concern is also not compulsory.
9) Self-employment: Sole trading concern is a solution to the problem of employment. A jobless person can start his own business to avoid unemployment. This business can be started even with limited capital and limited managerial skills.
10) Benefit of unlimited liability: In sole trading concern the liability of sole trader i6 unlimited It is good that his liability is unlimited Due to unlimited liability sole trader manages his business very carefully. He thinks twice before taking any important decision Careful management brings profit to the business.

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