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Sole Trader

Definition
A sole trader or a sole proprietor is one in which an individual introduces his own capital and uses his own skills and knowledge in the management of its affairs. He is solely responsible for the results of its operations. Sole proprietorships are common in retailing, farming, hairdressing etc.

Advantages
v  It is cheaper and easy to set up
v  It is flexible as decisions are taken personally
v  The owner is his own boss. He has complete control over his business
v  It can provide personal services to customers
v  There are no complicated legal requirements
v  The owner gets all the profit

Disadvantages
v  The owner is personally liable for the debts of the business
v  It has limited amount of capital
v  It can not apply division of labour and specialization, nor does it enjoy economies of scale
v  It lacks continuity
v  It enjoys limited managerial ability
v  Its losses can not be shared

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