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Sole Trading Concern / Sole

Proprietorship
'SOLE' MEANS SINGLE AND 'PROPRIETORSHIP' MEANS
OWNERSHIP.
SOLE TRADING CONCERN IS THE FORM OF BUSINESS THAT
IS OWNED, MANAGED AND CONTROLLED BY AN INDIVIDUAL.
IN SOLE TRADING CONCERN ,
AN INDIVIDUAL MAKES ALL THE INVESTMENTS,
BEARS ALL RISKS,
TAKES ALL PROFITS,
MANAGES AND CONTROLS THE BUSINESS BY HIMSELF.
Glos and Baker write that "A sole proprietorship is
a business owned by one person who is entitled
to all of its profits,"
Reed and Conover say "The single or the sole
proprietorship is a business owned and
controlled by one man even though he may have
many other persons working for him."
Barber's shops usually operate as sole traders

Plumbers operates in his Own
Simple Example Sole Trader Nepal
NO SHARING OF PROFIT AND
LOSS
The entire profit arising out
of sole proprietorship
business goes to the sole
proprietor.
If there is any loss it is also
to be accepted by the sole
proprietor alone.


One mans Capital
THE CAPITAL REQUIRED BY A SOLE
PROPRIETORSHIP FORM OF BUSINESS
ORGANISATION IS TOTALLY ARRANGED BY THE
SOLE PROPRIETOR.
FROM WHERE DOES HE BRING THE CAPITAL?
HE PROVIDES IT EITHER FROM HIS PERSONAL
RESOURCES OR BY BORROWING FROM
FRIENDS, RELATIVES, BANKS OR OTHER
FINANCIAL INSTITUTIONS.
One-man Control
The controlling power in a sole proprietorship
business always remains with the owner.
The owner or proprietor alone takes all the
decisions to run the business.
Of course, he is free to consult anybody as
per his liking.
The sole proprietor bears unlimited liability for
any losses incurred by the business
In case of loss the business assets along with
the personal properties of the proprietor shall
be used to pay the business liabilities.
Less Legal Formalities
Sole proprietorship form of business- requires
almost(LITTLE) no legal formalities .
Some does not require to be registered.
Depending on the purpose of the business and
depending on the nature of the business, the sole
proprietorship has to have a seal.
He may be required to obtain a licence from
the local administration or from the health
department of the government, whenever
necessary.
Maintain Secrecy
Sole Trading Concern can keep all its
internal matters of its business secret !!
Because of its Single Owner Nature
And also
`publish its book of account and any other
progress report for the knowledge of general
public.
Limited area of Operation
Sole trader has :-
Limited Resources
Limited Managerial Ability
Limited Manpower
Limited Capital
SO,,,,,,
It is unable to expand its business activities
in wide area and deal with various product
line,
AND LIMITED AREA OF OPERATION
Advantages/ Merits/
Positive sides of Sole
Proprietorship
i. Easy to
Form and
Wind up
ii. Direct Motivation
The profits earned belong to
the sole proprietor alone and
he bears the risk of losses as
well.
There is a direct link between
effort and reward.
So Direct Motivation
iii. Quick
Decision and
Prompt Action
iv. Better Control
In sole proprietorship
business the proprietor has
full control over each and
every activity of the business.
He is the planner as well as
the organiser, who co-
ordinates every activity in an
efficient manner.
v. Maintenance of
Business
Secrets
vi. Close Personal
Relation:-
The sole proprietor is
always in a position to
maintain good personal
contact with the
customers and
employees.
vii. Flexibility in
Operation:-
The sole proprietor is free
to change the nature and
scope of business
operations as and when
required as per his
decision.
Suppose, as the owner of a
bookshop, you have been selling
books for school students. If you
want to expand your business you
can decide to sell stationery items
like pen, pencil, register, etc.
If you are running an STD booth,
you can expand your business by
installing a fax machine in your
booth.
Encourages Self-
employment:-
Sole proprietorship form of
business organisation leads
to creation of employment
opportunities for people. Not
only is the owner self-
employed, sometimes he also
creates job opportunities for
others.
Limitations/Disadvantage/Cons of Sole
Proprietorship
i. Limited Capital:
ii. Unlimited Liability:
iv. Limited Size:
It is not always possible for a single
person to supervise and manage
the affairs of the business if it grows
beyond a certain limit.
iii. Lack of Continuity:
May end with the death and
Sickness of Owner
v. Lack of Managerial Expertise:
A sole proprietor may not be an expert in
every aspect of management.
He/she may be an expert in administration,
planning, etc., but may be poor in
marketing.
vi. Loss in Absence
vii. Possibility of Wrong Decision
Sole proprietorship form of
business organisation is suitable:
Where the market for the product
is small and local. For example, selling
grocery items, books, stationery,
vegetables, etc.
Where customers are given
personal attention, according to their
personal tastes and preferences. For
example, making special type of
furniture, designing garments, etc.
Where the nature of business is
simple. For example, grocery,
garments business, telephone booth,
etc.
Where capital requirement is
small and risk involvement is not
heavy. For example, vegetables and
fruits business, tea stall, etc.
Where manual skill is required.
For example, making jewellery,
haircutting or tailoring, cycle or
motorcycle repair shop, etc.
Procedure of
Registration
In Nepal Sole Trading Concern
is registered under the Private
Firm Registration Act, 2014.
Hence in Nepal, registration of
Sole Trading Concern is
compulsory.
It is illegal to conduct any
business without registration.
If sole trading is related to
commerce, then it should be
registered in Department of
Commerce
and if it is related to industry,
then it should be registered in
Department of Industry of the
Government.
At present following
procedure is applied for
registration:
(1) To Apply an Application
The person wishing to register
private firm should apply in
the prescribed form in the
concerned department.
The application form
contains the following
particulars:
a.Name of the private firm
b. Address of the private firm
c. Objectives of the firm and object
of transactions and statement of
work
d. Name and address of the owner
including the names of his father
and grandfather
e. Other particular as prescribed
by Government.
(2) To Deposit Registration Fees :
Registration fee must be deposited
in Nepal Rastra Bank or Any
Authorized Bank and the voucher of
it should be enclosed in the
application.
Fees depends upon the amount of
capital invested in the business.
a.Capital up to Rs.20,000 -Rs.160
b.Capital from Rs.20,001up to Rs.50,000 -
Rs.250
c. Capital from Rs.50,001up to Rs.1,00,000
-Rs.700
d. Capital from Rs.1,00,001up to
Rs.3,00,000 -Rs.2,100
e. Capital from Rs.3,00,001up to
Rs.5,00,000 -Rs.4,150
f. Capital from Rs.5,00,001up to
Rs.10,00,000 -Rs.7,600
g. Capital from Rs.10,00,001up to
Rs.50,00,000 -Rs.10,100
h. Capital more than Rs.50,00,001 -
Rs.15,100
3) To Receive the Certificate of
Registration
Department will issue the
Certificate of Registration.
This certificate is the evidence of
legal organization.
Generally, Sole Trading concern
Should Register Before
Commencement of Business, But for
Owners Convenience, can Register
after 6 Month of its Establishment.
Procedure of Renewal
All the registered firms
should be renewal each
year.
For renewal application
for renewal with renewal
fee should be submitted to
the concerned department
A renewal fee of the private firm is
charged according to capital.
The renewal of private
firm must be done
within 35 days of new
fiscal year. If the firm is not renewed
within the prescribed time a
fine of Rs.35 will be charged
up to the last date of Aswin
and after that fine of Rs.150
will be charged.
If the firm is not renewed

Government can prohibit the
export-import transactions


and bank account of that firm
through notice.
Effect of Non-Registration
In case private firm is operated
without registration
concerned department will charge a
fine of Rs.5 up to Rs.50.
If the same crime is committed up to
3 times the additional fine of Rs.10
will be imposed each time in the
original fine.
If he does fourth time, he can never
register private firm under his name.
Similarly the concerned department
can fine private firm from Rs.25 to
Rs.50 if the firm:-
fails to notify the changed that take
place within the prescribed time which
are required by act or if
if false statement is submitted.
If the firm is not registered of renewed
according to Act, Government can
prohibit the export import transactions
and bank account of that firm through
notice.