(1) Ease of formation:

The process of forming a sole trading firm does not require any legal formalities such as registration etc. Hence, it can be easily formed, saving time, money and efforts in formation.

(2) Personal care:

As the proprietor looks after the business himself, he will be able to locate all causes of wastage and loss and this leads to economy and efficiency in running the business.


(3) Detect motivation:

The sole trader enjoys all the profits of the business. Hence, he is encouraged to work hard and put forth his best ability in the management of the business as there is a direct relationship between effort and reward.

(4) Personal contact with customers:

A sole trader can establish personal contact with his customers who help him to maintain good relations with them and also to look into their individual choices, like and dislike and have a good relationship with them.


(5) Promptness in decision making:

As the sole trader is not answerable to anyone, he can take quick decisions and prompt actions while managing the affairs of the organisation.

(6) Fetter co-ordination:

The size of the business is limited and therefore, the proprietor cans achieve co-ordination in the activities of the business.


(7) Flexibility:

The owner enjoys the complete power to effect changes in the business or in the policies. This lends flexibility.

(8) Business secrecy:

A sole trap r can maintain business secrecy end can fully exploit new idea;, that comes to his mind.


(9) Personality development:

There is full scope for the development of the personality of the sole proprietor. He can develop personal qualities like self-reliance, initiative etc.

(10) Free from Government regulations:

This type of business organisations are least affected by Government regulations.


(11) Creditworthiness:

The unlimited liability helps the proprietor to get credit from others. His resources and his firm’s assets help him to build up creditworthiness.

(12) Benefit of self-employment:

It serves as the basis of an independent livelihood for many persons who possess business ability and professional drive.