What is a Sole proprietorship | Explanation | Features, Advantages And Disadvantages

Sole trade was the most popular form of business. But, nowadays form of business organization is a developed form of this system. The sole trader is a form of business organization. that is established by a single individual. He invested the necessary capital and managed all activities by himself. He is responsible for all profits and losses. Such as businessman is called a sole trader. Such as a trader known as a sole trader. This is not, that sole traders can not take the help of other people. He can help other people in the business. In the sole trade, the capital is invested by a single individual which means that nobody can be a partner in the capital. The sole trader is the best form of business organization because of its merits and specialities.

Features of the sole proprietorship

• Sole proprietorship business formation is very easy. There is no use in any action it runs without registration. Whenever a trader wants to close his business. But, some businesses run after registration like a chemist

• Lack of continuity in sole proprietorship there is no other owner. If the owner faces some problems such as illness, death, etc. In that case, nobody can run his business. And his business will be closed.

• All the risks of responsibility because the profit and losses of the sole trade are related to the owner. He enjoys all gains and losses.

• The sole trader has complete control over the business. He is only one owner and he knows about everything. Any employee can not think about any carelessness to be at work.

• Businesses and businessmen are not considered separately. Because the business has no legal entity from that of the businessman. All the assets and liabilities have to relate to the businessman. That's why he alone is responsible for all of this.

Merits of the sole proprietorship

• A sole trader is a single owner in the entire business. He does not need to consult anybody. He makes a quick decision whichever decision is better for his business.

• This business establishment is very easy. Because there is no need for any legal formation to start it. The sole trader can be run without getting registration. But not for all sole trade because some sole trade is needed for registration.

• we have seen more confidence in this business. A sole trader does not require any external motivation to do his work. Because he is self-inspired by making the right decisions. And he is not answerable to other people.

• The sense of accomplishment in the business. The owner does the hard work because he takes more effort.

Demerits of the sole proprietorship

• A sole trader has limited resources because in this business sole trader is owned by investors. And the sole owner does not invest more capital. He has limited capital and assets. Hence, the sole proprietorship business is at a small level.

• A sole trader has unlimited liability because he has limited resources. Sometimes he has to a possible payment. But, He can not pay because he has already invested more capital. In that case, he sold the assets of the business or personal property. All of this is responsible for ourselves.

• The business has a limited life because sole proprietorships have a sole owner whenever the trader conductss the business.

• Sole trade can not be doing all activities such as production, marketing, managerial, etc. That time he has more burden. But, he can not appoint any manager or employee because he has limited capital. Hence, He has limited managerial.