Sole Trader 101: Is This the Right Move for Your Business Dreams?

Sole Trader is the simplest business structure, where there's no legal distinction between the owner and the business.

Depending on your business type, there are pros and cons for being a sole trader.

Pros:

1. Easy and inexpensive to form

2. Complete control over decision-making

3. Simple tax preparation (self-assessment tax return)

4. Flexible management

Cons:

1. Unlimited personal liability for business debts and legal issues

2. Challenging to raise capital

3. Limited life (business ends if the owner dies or quits)

4. All responsibility falls on one person

Real Scenarios:

- Freelancers or consultants

- Small, low-risk businesses

- Businesses that don't need significant capital

- Those testing a business idea before formalising structure.

Which of the following is NOT a typical advantage of being a sole trader?

Easy to form

Simple taxes

Limited liability

Complete control

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