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Now that we have a basic idea of who a sole trader is, it’s now time to look at the various pros and cons that are associated with running a sole trader business.
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These limited companies usually overtake sole trader businesses if they see profitability or if they feel that the sole trader’s company can be a direct competitor to their business.Īdvantages and Disadvantages of a sole trader business: Therefore, most sole trader businesses eventually get bought out by limited companies. Very soon, this can even curb the growth of their company. A sole trader bears complete responsibility for the finances and accounting of their business and so it can get very difficult. This process may vary depending upon their country of residence.īeing a sole trader comes with its perks and risks. However, they may have to legally trademark their business name if it differs from their legal name. A sole trader can also use a business name other than their legal name. A sole trader will generally make all the decisions about starting and running their business and have the liberty to employ people as per their needs. A sole trader is legally responsible for all aspects of their business.
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If a single proprietor engages in any business activity without a formal organization and keeps the profits for themselves, they are known as a sole trader or sole proprietor. What is a sole trader? Source: Russell Smith Chartered Accountants|What is a sole traderĪ sole trader is the most simple and minimalistic form of business structure which is relatively inexpensive and easy to set up.