Business Organizations

The factors taken into consideration when a type of business organization is distinguished from others

- ownership
- capital 
- Decision making 
- Registration
- Legal personality
- Liability 
- Distribution of profit and loss
- Going concern
- Tax payments 
- Accounting and audit
- Objective

                                   Sole trade ( proprietorship )    

It is a type of business organization where an individual makes the capital contribution and 
conducts the business on his own decision making, within minimum of legal procedures. in
the whole world what is common is sole trade. the main reason for this is that in starting a 
business as well as running a business in case of a sole proprietorship, it is possible to carry
on without adhering to strict legal rules and regulations

  The features of a sole proprietorship 

- The ownership is with one person 

- Could commence with minimum of legal procedures. registration is not compulsory . however
   if the business is carried on under the name of another person, it should be registered under the
   Business  Names  Registration  Ordinance    (Business Names Ordinance of1918)

- The capital is supplied by the owner out of his saving or funds obtained from others sources

- Decision making by the owner himself . he has the control over the business

- The profit and loss are borne by the owner himself. there is no sharing or profits with others
   persons. the earning of profits depend on his decision 

- Liability is unlimited . that is for the outside borrowing owners liability is unlimited. those abilities 
   not only extend up to the business properties but even the private property bound by the liability.

- There is no legal personalty. that is front of law business is not treated as a name of the business nor 
   be present in court in the name of the business .

- There is no community. that is one the death of the owner or on his full debility business could get  
   terminated

- Accounting or auditing is not compulsory.

- No taxes could be paid in the name of the business. the owner could personally pay the taxes.

- No special law is applicable to dissolution.  
  

   Although there are no special acts affecting to sole trade the following acts which are common to business are effective regarding sole trade too  

- consumer protection act.
- Employees provision fund act
- Shop and office employees act
- Employees trust fund act
- Labour Laws 

Advantages of sole trader

- Commencement is easy . That is with a minimum  of capital and with minimum of rules and regulations , business could be started

- Profit could be enjoyed individually

- Quick independent decisions could be made

- Registration is not compulsory

- The business could be terminated at any time one wishes .

- Accounting and auditing not compulsory.

- The possibility obtaining the service of one family members 

  Disadvantages of Sole Trade

- Liability is unlimited 

- Lack of capital(limitation of sources of capital)

- Losses have to be borne alone 

-No continuity 

-No legal personality

-Difficulty in making correct decision 

-Difficulty in expanding the business 

-Lack of managerial knowledge 

-The resources are not properly managed as accounting is not 
  cumpulsory

-Difficulty of managing when the business expand