EXPLAIN THE CHARECTERISTICS OF SOLE PROPRIETORSHIP
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Answer:
. Sole Proprietorship:
The individual carries on business exclusively by and for himself. He invests his own capital and controls the whole business. He bears all the risks and is the master of all the profits.
2. Free from Legal Formalities:
A sole trade business is not expected to meet any legal requirement. A sole trader may engage in any business unless licence is required under law. Suppose, he wants to open a cloth shop or a grocery store, he will do it but if he wants to open a restaurant he will have to obtain a licence before opening the same.
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3. Unlimited Liability:
In sole trade business, liability is unlimited. The proprietor bears all the losses arising from the business. His private property is also liable for the business obligations.
4. Sole Management:
The sole trader manages the whole business himself. He prepares the plans and executes them under his own supervision. He is not required to consult anyone else in taking decisions. The ultimate authority to manage and control rests with the proprietor.
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5. Secrecy:
It is also an important characteristic of sole proprietorship. All the decisions are taken by the proprietor himself. He is in a position to keep his affairs to himself and maintain perfect secrecy in all matters.
6. Freedom regarding Selection of Business:
A sole trader is at freedom to select any business of his choice. He has not to depend on others.
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7. Proprietor and Proprietorship are One:
It is a fact that the sole trader and his business are not separate entities. Loss in the business is his loss. Liabilities in the business are his liabilities. He bears all the risks and is the master of all the