A sole trader is a trade that is owned and controlled by one person. This is very attractive for those who wish to retain ownership of the business. A "sole trader" is described as a person trading under his / her own name, or a registered business name.
Many sole traders decide to operate under their own name and do so without any problem. However, if you use a name other than your surname, you must register the name as a Business Name in Companies Registration Office.
Advantages of the Sole Trader
- The sole trader is not required to file accounts, which would be available for inspection by the public.
- Fewer legal formalities compared to other structures.
- The income from the business is personal income and expenses which are incurred "wholly and exclusively" in the course of the trade are allowable deductions.
- Closure of the business requires less formality.
Disadvantages of the Sole Trader
- The owner is personally liable for all debts of the business.
- Raising capital can be more difficult.
- The life of the business depends entirely on the owner.