Sole Trader

Question 1

What is a sole trader?

Answer 1

A sole trader is an individual who owns an enterprise (sole proprietorship).

Question 2

Mention 5 characteristics of sole traders.

Answer 2

1. ) Owned and managed by one individual.
2. ) Has no continuity.
3. ) No legal personality.
4. ) Easy and cheap to establish.
5. ) Owner has unlimited liability.

Question 3

List five Advantages of sole traders.

Answer 3

1. ) The owner is in complete control of the business.
2. ) All profits belong to the owner.
3. ) Owner works hard for business to succeed.
4. ) No formal documents / legal requirements needed except of local authorities.
5. )Improved relationships with customers and employees because of personal contact.

Question 4

List five advantages of sole traders.

Answer 4

1. ) Owner concentrates on talents and could neglect other business functions.
2. ) Owner is often overworked.
3. ) Business has no continuity.
4. ) Owner has unlimited liability.
5. ) Capital is limited to what owner supplies.