5a Soletraders Flashcards

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1
Q

What is a sole trader?

A

A business a single person owns and runs.

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2
Q

What is the legal status of a sole trader?

A

The trader and the business are the same legal entity.

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3
Q

What are the advantages of a sole trader?

A
  1. Profits belong to owner.
  2. No formal procedures to set up - no need to register at CoHo.
  3. Independent - no need to gain approval from anyone.
  4. Self-accountability - no need to disclose info about the company
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4
Q

What are the disadvantages of a sole trader?

A
  1. Huge risk - business’ debts are your debts.
  2. Limited options to finance - any loans will have to be personal.
  3. High dependence on the owner - if the owner is ill, the business will die with them.
  4. Success of the business is limited to the owners skills should they not hire anyone.
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