Sole Trader Business | Meaning | Definition | Important Features

What is a Sole Trader Business?

When a business unit is owned by a single person, it is called “Sole Trader’s Concern“. It is also known as “One man’s business“. The person who does the business is called the sole trader or sole proprietor.

Sole Trader Business

Sole Trader Business – Meaning, Definition, Important Features

Definition of Sole Trader Business

In the words of Kimball and Kimball,

It is the oldest and simplest form of business organization.

The sole trader carries on business by himself and for himself. He is the proprietor, manager and controller of business. He raises the necessary capital; organizes the business; enjoys the profits and bears the losses.

According to O.S. Gerstenberg,

Sole trader owns all and risks all

According to Paterson and Plowman,

A sole proprietorship has no legal existence apart from the proprietor himself. He is all in all in the firm.

In the words of L.H.Haney,

The individual entrepreneur form of business organization is an organization at the head of which stands an individual or sometimes a family group of individuals, as the one who is responsible, who directs its operation and who alone runs the risk of failure.”

According to Edward T. Elbourne,

Sole proprietorship is a business initiated and operated by one individual who carries all financial and administrative responsibilities, employing such assistants as may be necessary.

James Stephenson opines,

A sole trader is a person who carries on business exclusively by and for himself. The leading feature of this kind of concern, is that the individual assumes full responsibility for all the risk connected with the conduct of the business. He is not only the owner of the capital of the undertaking but, is usually the organizer and manager and takes all the profits or responsibility for losses.

Features of Sole Trader Business

The important features of sole proprietorship are as follows.

1. A Sole Trader business is owned by only one person.

2. The business is controlled by a single individual.

3. The risk arising out of a sole trade concern is borne by a single person.

4. The liability of the owner of the business is unlimited.

5. The business firm has no separate legal-entity.

6. To set up sole proprietorship, no legal formalities are necessary.

7. Decisions are made by a single person.

Leave a Reply

Recent Posts


Related pages

securitisation definitionprimary and secondary research advantages and disadvantagesdisadvantages of middlemenelasticity of demand in managerial economicsdifficulties in capital budgetingforecasting manpower requirementsteeming and lading definitionmeaning of unfair trade practicesfrederick winslow taylor definitionnationalization advantages and disadvantagesadvantages of ecommerceadvantages and disadvantages of partnership firmdecentralised meaningobjectives of the wtoexample of conglomerateadvantages and disadvantages of venture capitaladvantages and disadvantages of mbohistory icici bankinductive and deductive methodsexamples of skimming pricingwage rate varianceamalgamated meanssalesperson recruitmentfranchise definition advantages and disadvantagesdebtors collection periodadvantages of computerized accounting systemfinance ebitreceivable turnover ratio formulaorganisational structures advantages and disadvantagescluster math definitiontruck wholesalers definitionactivity based budgeting definitiontqm benefitsdirect materials varianceconsumerism defintiondemerits of science essayimportance of retailingrbi history and functionsnon probability sampling disadvantageswhat is a promoter in company lawwhat is preferential issuemarginal costing definition accountingelement of scientific managementexplain insurable interestjobbers in stock exchangetypes of departmentalization in managementimportance of overhead coststructure of the european unionstructure european uniondisadvantages of inflation accountingmerits and demerits of online marketingmanagerial accounting as compared to financial accountingglobal marketing standardization definitionadvantages and disadvantages of internet bankingmeaning of vouchedmarginal costing advantagesmeaning of cif in shippingdef sporadicadvantages of npv method of capital budgetingcentralization and decentralization advantages and disadvantagesdays sales outstanding ratioinstallment sale agreementstaff turnover formulaprècisconsumable goods examplesformula for material price variancepromoter in company lawwhat is marginal costingoperating cycle in financedefinition of middlemen in marketingunethical advertisement