The sole trader business is set up for the following objectives:
1. To create self-employment:
Sole trader business helps people to create work for them. Instead of looking for a job outside, a person can start his own small business.
2. To utilise funds:
A person having surplus funds may start sole proprietorship to make productive use of his funds. If the funds are small and not enough for a big business, it is better to set up a small business instead of keeping the funds idle. Sole proprietorship enables the owner to have full say and complete control over the business.
3. Independent living:
Sole trader business provides opportunity for an independent and honourable living. The sole trader is his own master and frees to take all the decisions.
4. To serve customers:
A sole trader comes in direct contact with his customers. Therefore, he can better understand and serve the consumers. Sole trader business can be set up nearest to consumers so that they can buy their daily necessities conveniently.
5. Equitable distribution of wealth:
Sole trader business helps in the distribution of income and wealth among a large number of people. It avoids monopoly and concentration of wealth in a few hands.
6. Feeder to large business:
Sole proprietorship firms are usually small in size. These units provide ancillary service to big firms.