unit 1 types of ownership - soletraders Flashcards
what is a sole trader
A sole trader describes any business that is owned and controlled by one person, although they may employ workers .
name me examples of sole traders
newsagent’s shop. Also Individuals who provide a specialist service like hairdressers, plumbers or photographers, are also sole traders.
sole traders do not have what - advantage
Sole traders do not have a separate legal existence from their ownership of the business they are the business.
what is the result of the sole trader being the owner of the business- advantage
The owners are personally liable for the business’s debts, and may have to pay them out of their own pocket and belongings. This is called unlimited liability .
what is and advantage of opening up an sole trader business- advantage
The firms are usually small, and easy to set up.
is it expensive to open a sole trader business- advantage
Generally, only a small amount of capital needs to be invested, which reduces the initial start-up cost.
is the wage bill high or low- advantage
The wage bill will usually be low, because there a few or no employees.
does a sole trader have independence- advantage
It is easier to keep overall control,because the owner has a hands-on approach to running the business
can make decisions without talking to anyone else.
what can be difficult from running your own business - disadvantage
The sole trader has no one to share the responsibility of running the business with. A good hairdresser, for example, may not be very good at handling the accounts.
how many hours may a sole trader work - disadvantage
Sole traders often work long hours and find it difficult to take holidays, or time off if they are ill.
what can be difficult starting your own business - disadvantage
Developing the business is also limited by the amount of capital personally available.
you may need to borrow money from the bank which could lead someone into debt
the risk of unlimited liability - disadvantage
There is also the risk of unlimited liability, where the sole trader can be forced to sell personal assets to cover any business debts.
