SOLE TRADER

Sole proprietorship – advantages and disadvantages

Consider operating as a sole trader if your business is small and capital investment is minimal.

Advantages of sole trading include that:

you’re the boss
you keep all the profits
start-up costs are low
you have maximum privacy
establishing and operating your business is simple
it’s easy to change your legal structure later if circumstances change you can easily wind up your business.

Disadvantages of sole trading include that:

you have unlimited liability for debts as there’s no legal distinction between private and business assets
your capacity to raise capital is limited
all the responsibility for making day-to-day business decisions is yours
retaining high-calibre employees can be difficult
it can be hard to take holidays
you’re taxed as a single person the life of the business is limited.

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