Unit 1- Sole Traders Flashcards
What is a sole trader?
A sole trader is an individual who owns and operates a business on their own.
True or False: A sole trader has limited liability.
False
What is one advantage of being a sole trader?
Sole traders have complete control over their business decisions.
Fill in the blank: A sole trader is responsible for all ________ of the business.
debts
Which of the following is a disadvantage of being a sole trader? a) Full control b) Unlimited liability c) Simple tax structure
b) Unlimited liability
What is the primary tax obligation for a sole trader?
Sole traders pay income tax on their profits.
True or False: A sole trader can employ staff.
True
What must a sole trader register for if their income exceeds a certain threshold?
They must register for VAT (Value Added Tax).
What is one common reason people choose to become sole traders?
They want to start a business with minimal startup costs.
Fill in the blank: Sole traders are often referred to as ________ businesses.
unincorporated
What document is typically required to formally start a sole trader business?
There is no formal document required, but a business name may need to be registered.
True or False: A sole trader can be a corporation.
False
What is a key characteristic of a sole trader’s business structure?
It is owned and operated by a single individual.
What happens to a sole trader’s business if they pass away?
The business may cease to exist unless transferred to another person.
What is the legal status of a sole trader in relation to their business?
The sole trader and the business are legally the same entity.
