Sole Traders and types of Sector

Question 1

What is a public sector?

Answer 1

This is owned by the public but controlled by the government or local authorities on our behalf. These enterprises include the army, police, hospitals, schools, fire service, leisure, centers, retirement and care homes.

Question 2

What is a private sector?

Answer 2

These are businesses owned by private individuals. Each type of ownership has its own legal rights and responsibilities, so that individuals who wish to own and run a business can choose the type which suits their own financial and personal circumstances. Businesses in the private sector range from those which are owned and run by one person, to multinationals which are owned by many people and employ thousands of people in many countries.

Question 3

What is a sole trader?

Answer 3

Someone who owns and runs their own business which is usually a small business. For example, a hairdresser, window cleaner, plumber, local shopkeepers or an electrician.

Question 4

Who is the business owned by if the person is a sole trader?

Answer 4

The sole trader them self.

Question 5

Who is the business controlled by if the person is a sole trader?

Answer 5

The sole trader them self.

Question 6

Who is the businesses managed by if the person is a sole trader?

Answer 6

The sole trader them self.

Question 7

How is finance provided for the start up of the business if the person if a sole trader?

Answer 7

It is raised by the owner through personal savings or borrowing from the bank or family and friends.

Question 8

Who does the profit go to if the person is a sole trader?

Answer 8

The owner (the sole trader them self).

Question 9

What are the advantages of being a sole trader?

Answer 9

• It is easy to set up - no complicated paperwork or solicitors needed.
• It is cheap to set up - not much capital required.
• They are their own boss - don’t have to take orders from anyone so they can make their own decisions.
• Keep all of the profit.
• Business affairs can be kept private.

Question 10

What are the disadvantages of being a sole trader?

Answer 10

• Unlimited liability - could lose everything if the business fails.
• They have no-one to share workload with - can’t go on holiday or be sick.
• Finance can be difficult to raise - makes expansion difficult.
• They are incorporated - the owner and business are classed as legally the same so if anything goes wrong, it is the owner who is sued, not the business.
• There is a lot of responsibilities for one person - difficult for them to do everything.