Sole Trader
Key terms of a Sole Trader
Definition of a sole trader: A sole trader is a person who sets up their own business. They take the financial risk of loss and the personal risk of failure.
Liability: A sole trader has unlimited liability. This means the owner can lose any personal assets as well as anything invested in the company if they need to pay back debts.
Advantages of a sole trader:
Liability: A sole trader has unlimited liability. This means the owner can lose any personal assets as well as anything invested in the company if they need to pay back debts.
Advantages of a sole trader:
- A sole trader has the advantage of being their own boss.
- They make all the decisions about the company and dont have to discuss with anyone else.
- They can choose their own working hours and holidays.
- A sole trader has the opportunity to get to know their customers and build a better relationship with them
- This form of business is easy to set up.
- The sole trader keeps all the profits of the business.
- A sole trader usually enjoys the work they are doing.
- Disadvantages of a sole trader :
- A sole trader has unlimited liability. This means that they can lose any personal assets as well as anything invested in the company, if they need to pay off debt.
- It can sometimes be stressfull for the sole trader because all responsibility lies with them.
- A sole trader takes the financial risk of loss and personal risk of failure.
- There can be long working hours.
- Lacks continuity.