Understanding Business - The Private Sector Flashcards
What is a sole trader
A business owned and run by one person
Advantages of being a sole trader
-Owner gets to keep all the profit
-Owner gets to make all their own decisions
-Easy to set up (do not not need to complete lots of legal documents)
Key features of being a sole trader
-Owned by one private individual
-Controlled (decision making) by the private individual
-Financed by their own personal savings, or possibly a bank loan or grant
Disadvantages of being a sole trader
-Raising finance can be difficult- banks will often look at sole traders as high risk
-Workload and responsibilities cannot be shared with another owner
-Unlimited liability. If the business goes into debt, the individual owner is responsible for paying it back. This could mean their personal possessions are being taken to pay this
