Answer the following questions:

Mention any four limitations of sole trading concerns.

Sole trading concerns is one of the oldest and simplest form of business organizations, it is owned and managed by a single person who not only enjoys the profits but also shoulders the losses faced by the business. Four limitations of sole trading concerns are as follows –

1. Since these companies are managed by a single person, it limits the managerial ability in the company.

2. Since these concerns have a single investor, the amount of capital is often limited, making the expansion of the concern an impossible venture.

3. The owner cannot move responsibility to others and also suffers solely in case of losses.

4. The life expectancy of such concerns is short as death or insolvency of the sole trader will shut it down.