Sole Trading Concern is the form of business that is owned, managed and controlled by an individual. It is the oldest and most commonly used form of business organization. It is as old as civilization. Historically, it appears that business first started with this form of organization. This organization is also known as Sole proprietor, Individual proprietorship and Single entrepreneurship. The majority of this type of business is on small scale.
In sole trading concern an individual makes all the investments, bears all risks, takes all profits, manages and controls the business himself. He is known as sole trader or proprietor. It is the competence of the sole trader that determines the future of the business. His powers are unlimited and his decisions are final. He is the owner of all the profits but in case of loss he has to bear all losses. So his liability is unlimited and creditors are entitled to have claim even on his private property. Thus, a sole trader does not try to expand his business.
Some Definitions
Peterson and Plowman : “ As sole proprietorship is a business unit whose ownership and management are vested in one person. This individual assumes all risk of loss and failure of the enterprise and receives all profits from its successful operation”.
James Stephenson : “ A sole trader is a person who carries on business exclusively by and of himself. The leading feature of this kind of concern is that the individual assumes full responsibility for all the risks connected with the conduct of the business. He is not only the owner of the capital of the undertaking but usually the organizer and manager and takes all the profits or responsibility of losses”.
In Conclusion, a suitable definition can be given as follows:
Sole proprietorship is a form of business organization in which proprietor employs capital, uses his own skill and intelligence in the management of his affairs, undertakes the risk and responsibility, and receives all profits from the successful operation
In sole trading concern an individual makes all the investments, bears all risks, takes all profits, manages and controls the business himself. He is known as sole trader or proprietor. It is the competence of the sole trader that determines the future of the business. His powers are unlimited and his decisions are final. He is the owner of all the profits but in case of loss he has to bear all losses. So his liability is unlimited and creditors are entitled to have claim even on his private property. Thus, a sole trader does not try to expand his business.
Some Definitions
Peterson and Plowman : “ As sole proprietorship is a business unit whose ownership and management are vested in one person. This individual assumes all risk of loss and failure of the enterprise and receives all profits from its successful operation”.
James Stephenson : “ A sole trader is a person who carries on business exclusively by and of himself. The leading feature of this kind of concern is that the individual assumes full responsibility for all the risks connected with the conduct of the business. He is not only the owner of the capital of the undertaking but usually the organizer and manager and takes all the profits or responsibility of losses”.
In Conclusion, a suitable definition can be given as follows:
Sole proprietorship is a form of business organization in which proprietor employs capital, uses his own skill and intelligence in the management of his affairs, undertakes the risk and responsibility, and receives all profits from the successful operation
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