Sole trader

Question 1

What is a sole trader?

Answer 1

A sole trader is a business owned by one person.

Question 2

Give 5 advantages of being a sole trader.

Answer 2

1. easy to set up in business.
2. You keep all the profits.
3. You can make all your own decisions such as where to locate the business, who to employ and what you sell.
4. Offers personal service.
5. Business affairs are private.

Question 3

What are the disadvantages of being a sole trader.

Answer 3

1. Unlimited liability. This means that if the business goes bankrupt then the owner may have to sell his personal possessions (house, car etc) to pay off the debts.
2. There may be a lack of capital available as there is only one owner.
3. There may be a lack of expertise.
4. There may be a lack of ideas.

Question 4

Give examples of sole traders.

Answer 4

plumbers, joiners, chip shops, hairdressing and many, many more.