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Top 10 Key Features of a Sole Trader Business – Subjectquery.com

Top 10 Key Features of a Sole Trader Business – Subjectquery.com
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The key features of a sole trader business can be pointed as follows:

  1. Simple and Easy to form,
  2. Individual Owner, ‘
  3. Manager and Controller,
  4. Responsible for his own liabilities,
  5. Less legal formalities,
  6. Decision-Making Power,
  7. Easy to Dissolve,
  8. Sources of Capital,
  9. Flexibility in Operations,
  10. Build relations with customers.

1. Simple and Easy to form-

Easy to form is the first features of a sole trader and it means an establishing a sole business for a particular individual is an easy thing to do, which it manages by itself and all the entire capital itself is invested. At the time of formation, there are various valid factors are required, like:

  • Discover the idea about the business,
  • Find a particular place,
  • Limited amount of capital Required,
  • Minimum legal formalities Required.

After the time of formation, the ownership of the business is transfer to the sole trader and through which the entrepreneur will start controlling everything in his/her business.

2. Individual Owner-

Individuality is the second features of a sole trader and it means that only one or single person can be an owner in any sole proprietorship business because if the two or more owners are in a business, then they will be converted into business partnership firm. It is not that in the sole proprietorship business, there can’t be two or more persons, but they are treated as an employee, workers, and helpers.

In the sole trader business, an individual has all the rights of authorities and responsibilities, due to which he/she can take the decisions very well and implement very well in his/her business.

3. Manager and Controller-

Manager and Controller are the third features of a sole trader and it means a sole proprietorship is a form of business that has an individual owner who is accountable for making and managing the decisions for the sole business company. In this business, it has one sole owner is also known as manager and controller. He/she has got perfect responsibility and authority to plan for the business and implement them without any interference of any person.

This feature is a very important feature for the benefit of a sole trader because through this he/she can develop their working attitude, potential, capacity, efficiency, supervision ability, and so on.

Note: Features of a sole trader are also known as features of sole proprietorship.

4. Responsible for his own liabilities-

This is the fourth features of a sole trader and it means that there is only one sole proprietor or business owner in the sole proprietorship business, due to which all the liabilities have to be handled by him. In this business, the nature of the liability is unlimited. If a sole trader has any kind of loss or liabilities in business then he/she is paid money to creditors by selling his/her personal property like land, building, and machinery (if he/she has).

The huge amount of liability is not good for the sole proprietor because this immerses his/her business and him also. So, that’s the reason, unlimited liability is also treated as a disadvantage factor for our sole proprietorship business.

5. Less legal formalities-

Less legal formalities are the fifth features of a sole trader and it means that, in the sole proprietorship business, the legal documents are necessary but in terms of less. At the time of formation, there is no legal documents are required, similarly, at the time of dissolution, there are no legal documents are required. In any case, a couple of valid restrictions might be there in setting up a particular type of business. Like:

To open a restaurant, the sole trader needs a legal license from the municipality office, and to open a medical shop, the sole trader must have a legal license from the government (state or central).

Note: Features of a sole trader are also known as features of sole proprietorship.

6. Decision Making Power-

Decision making is the sixth features of a sole trader and it means that an individual owner of the sole proprietor business can take all the legal decisions about the business because he/she is the owner and manager of his/her business. He/she has the responsibility and authority to take decisions and implement it on the business for the growth or success.

7. Easy to Dissolve-

Easy dissolution is the seventh features of a sole trader and it means that the sole proprietorship business has no legal documents regarding the business. In this case, an only business owner can dissolve his/her business. So, that’s the reason, the dissolution of the sole proprietorship firm is very easy.

8. Sources of Capital-

This is the eighth features of a sole trader and it means that the capital is the initial backbone of the business because it helps to decide the size and volume capacity of the company. In the sole proprietorship business, there are various ways of acquiring the funds in the business. Those are:-

  • Personal savings,
  • Borrowing loans from family and friends,
  • Borrowing loans from financial institutions.

9. Flexibility in Operations-

This is the ninth features of a sole trader and it means, the sole proprietor business is the best business for an individual person because, in this business, he will be the owner and manager and also can take relevant decisions related to the business.

If a sole trader has a related power and authority from his business, then he will be able to run his business according to his mind so that he will see simplicity and flexibility in his work. So, that is the reason, the flexibility is also the main advantage or feature of the business.

10. Build relations with customers-

This is the tenth features of a sole trader and it means that the sole proprietor is always trying to keep good relationship among the customers and the individuals. The perfect relations is the source of happiness because it creates the coordination chain among the sole trader and their customers.

Through good relations, the reach of a sole proprietorship business is increasing day by day and it is a very good factor to maintain the trust.


Recommended Article:-

  1. 9 Characteristics of Sole Proprietorship Business
  2. Top 10 Advantages of Sole Proprietorship 

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