“A sole trader is a
person who trades on his own account rather than in partnership or as a member
of a company.”
Sole trading concern is the oldest form of commercial organisation. Sole
means one person. So a trading concern is an organization where all business
activities are controlled and managed by one man. He is also solely responsible
for the debt and risk of the firm. The following are some of the features of a
sole trading concern.
There are the many advantages of Sole Trading Concern. The advantages of Sole trading concern are as follows:
"Merits of Sole Trading Concern"
(1) Easy of Establish:-
Sole trading concern can be
established very quickly and easily. Anybody who wants to start a business can
do so, whenever, he likes. In Nepal, only nominal legal formality of registration
is necessary.
(2) Easy to Dissolve:-
Dissolution of sole trading concern
equally simple. There are no legal formalities in this regard. Proprietor can
dissolve business whenever he likes to do so.
(3) Effective Control:-
In this form of business organization
proprietor is responsible for all types of activities. He controls all
functions and takes decisions at appropriate time. So, the business is
controlled in an effective way. He controls all functions and takes decisions
at appropriate time. So, the business is controlled in an effective way.
(4) Direct Motivation:-
The direct relationship between
effort and reward serves as a powerful incentive to the proprietor to manage
the concern efficiently. The proprietor being entitled to the entire profits of
the concern tries to maximize profits by utilizing his talents and activities
in the best possible way.
(5) Personal Supervision:-
The proprietor is able to
supervise every work of the business himself. This helps to build up a close
and cordial relationship with the employees. He can take personal interest in
his customers and he can meet their individual and typical needs easily and
adequately. It ensures effectively and economy in the operation.
(6) Benefit of Unlimited Liability:-
The proprietor can
obtain loan on his personal credit. The liability being unlimited, the
creditors feel secure in extending credit.
(7) Prompt Decision:-
The owner has full control over his
business. So he is able to take decision promptly without consulting anybody.
If more than one person is involved in decision making then delay is bound to
occur.
(8) Secrecy:-
The proprietor can maintain business secrets.
There is no legal regulation regarding the disclosure of business information.
So he can maintain secrecy from his competitors. Secrecy is very vital for
business success.
(9) Flexible:-
Sole trader enjoys the maximum flexibility in
his business. If any change in business is required, he does no have to consult
any one and can make the change without delay. No legal formalities are
required for making changes in operations. This gives flexibility to this type
of business.
(10) Social Importance:-
From social viewpoint sole trading
concern is important because: (a) It is a means for earning livelihood
independently. (b) It avoids concentrating wealth in few hands. (c) It brings
competition among sole proprietors, so they provide goods in cheaper rates to
the society. (d) Qualities like self-reliance, self-confidence, tact and
initiative are developed in this organization.
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