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    This document discusses the advantages and disadvantages of being a sole trader. It notes that a sole trader business is the easiest to set up as it only requires offering goods or services for sale with no special paperwork. Advantages include lower startup costs, sole decision making authority, and keeping all profits. However, disadvantages are that the business may suffer if the sole trader falls ill or takes holidays, long work hours are often required as the sole trader is the only employee, and obtaining loans can be difficult due to higher bankruptcy rates for sole traders. The biggest disadvantage is that the sole trader has unlimited liability for all business debts.

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    This document discusses the advantages and disadvantages of being a sole trader. It notes that a sole trader business is the easiest to set up as it only requires offering goods or services for sale with no special paperwork. Advantages include lower startup costs, sole decision making authority, and keeping all profits. However, disadvantages are that the business may suffer if the sole trader falls ill or takes holidays, long work hours are often required as the sole trader is the only employee, and obtaining loans can be difficult due to higher bankruptcy rates for sole traders. The biggest disadvantage is that the sole trader has unlimited liability for all business debts.

    Copyright:

    Attribution Non-Commercial (BY-NC)
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    28 views2 pages

    A Sole Trader

    Uploaded by

    coplayblank
    This document discusses the advantages and disadvantages of being a sole trader. It notes that a sole trader business is the easiest to set up as it only requires offering goods or services for sale with no special paperwork. Advantages include lower startup costs, sole decision making authority, and keeping all profits. However, disadvantages are that the business may suffer if the sole trader falls ill or takes holidays, long work hours are often required as the sole trader is the only employee, and obtaining loans can be difficult due to higher bankruptcy rates for sole traders. The biggest disadvantage is that the sole trader has unlimited liability for all business debts.

    Copyright:

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    of 2

    A sole trader is the most common form of business ownership and the easiest to set up.

    It means
    that the business is owned and run by one person - though the business may employ a large
    number of people. The owner will normally provide the money to set the business up, but he or
    she could borrow money from a bank or other financial institution. The first likely objective of
    the sole trader will be survival as many new businesses run out of money in their first few
    months of trading.

    ADVANTAGES OF BEING A SOLE TRADER


    A sole trader is the easiest form of business to set up. All you have to do is offer a good or
    service for sale and you are a sole trader! No special paper work is required, so a sole trader is
    able to start business immediately.

     They are usually small businesses, so less money is required to set them up;

     The owner is in sole charge so quick decisions can be made without having to consult
    others;

     The owner gets to keep all of the profits, they don't have to be shared with others;

     Financial information can be kept private;

     The needs of local people can be catered for as can special tastes as the owner will know
    the local market.

    DISADVANTAGES OF BEING A SOLE TRADER


    If the owner becomes ill or goes on holiday the business may suffer. This can be less of a
    problem if the sole trader employs a manager or managers. How often the sole trader is prepared
    to leave the manager in charge will depend upon how much they trust the managers or
    employees.

    Many sole traders work very long hours, as they may be the only ones who work for the
    business. It may be the case that they are motivated to work long hours because they are working
    for themselves and they will get the extra profits from their extra work.

    Money can be difficult to raise as many banks and other lending institutions will be reluctant to
    lend to sole traders because they have a higher rate of bankruptcy.
    Their prices are often higher than those of larger organisations. This is because sole traders tend
    to be small and are unable to buy in bulk and benefit from lower prices. Sole traders often join
    voluntary groups (such as Spar, VG, Mace and Londis) in order to be able to buy in bulk.

    The biggest disadvantage for the sole trader is that s/he has complete responsibility for all the
    debts of the business. This is called unlimited liability. This means the owners can lose all of
    their personal possessions if they can not pay the debts of the business, i.e., it goes bankrupt.

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