The most common type of unincorporated business is the sole trader.
A sole trader is just an individual owning the business on his/her own.
Remember that a sole trader can also employ people – but those employees don’t share in the ownership of the business.
The sole trader owns all the business assets personally and is personally responsible for the business debts. Crucially - a sole trader has unlimited liability.
The main benefits and drawbacks of operating as a sole trader can be summarised as follows:
Advantages of being a sole trader:
Drawbacks of being a sole trader:
The simplicity and informality of setting up as a sole trader means that it is used by many small and start-up businesses, including those that are not run full-time.
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