Although the sole trader might not work alone, ‘Sole Trader’ means the business owner is ‘solely’ responsible for the business,
The sole trader carries all the legal and financial responsibility for the business, including its debts. Thus, the sole trader is personally responsible for any losses the business makes. The sole trader can keep all of the business’s profits after tax has been paid on them.
Responsibilities for a sole trader comprise:
Advantages
The advantage of a sole tradership is that the individual can run the business within their own autonomy in accordance with legal and taxation regulations. It is easy to set up and relatively easy to cease trading.
Disadvantages
The disadvantage of this entity is the significant risk associated with being responsible for all the debts of the business. Some, but not all, risks can be mitigated by insurance.
