There are a number of different options when setting up a new or small business. These may depend on the size of the business, the number of owners and the level of risk owners are willing to take.
A sole trader is a business that is owned and run by one person. There is only one owner, but they may have employees who work for them. Sole traders are usually start-ups or small businesses. For example, photographers, electricians, hairdressers, graphic designers, social media influencers, bloggers, small online clothing brand owners and beauty therapists may set up as sole traders.
Sole traders have Unlimited liability When the business owner or owners are personally responsible for all the debt of the business, no matter what the value. and the owner is personally responsible for the debts of the business. A sole trader pays income taxTax that someone pays based on their personal income (the money that they earn). on their earnings.
Some advantages of sole trading:
it is quick and easy to set up as a sole trader
the business owner has a lot of control over the business and its money
it gives individuals the opportunity to be their own boss and make all the business decisions
it has low set-up costs
Some disadvantages of sole trading:
it has the risk of unlimited liability
it can involve long work hours and stressful conditions
there is a high level of responsibility for the owner
often the owner performs many different roles in the business
