Sole Trader

A sole trader or sole proprietor is a variety of business entity which has no separate divide from the owner, meaning that the company or enterprise is owned by one person who has sole responsible for the company often recognised by a trading name. Some of the benefits of becoming a sole trader are the differences in tax payments and the incentive that all profits made from the business stay with the owner.

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As a sole trader corporate taxes do not have to be paid with alternatively, personal income taxes being paid, consequently resulting in no double taxation unlike a corporate entity. An identical small business servicing as a corporation or partnership would be required to prepare and present a tax return several pages in length plus quarterly and annual payroll tax returns. Every business will include a form of government regulation, although being a sole trader gives additional freedom from these government regulations.

Some of the disadvantages that are associated with being a sole proprietor arise from the point that shares of the company can not be sold which will in-turn causes difficulties with raising capital. There are many responsibilities which come with being a sole trader, the biggest being personally liable if the business is sued. The uncertainty of the existence of the company can also cause concern if anything was to happen to the company owner. This can also cast doubts for potential employees who look for stability. Further problems can continue to develop once the company starts to grow as it can become difficult to manage.

Sole Trader

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