SOLE TRADER

Being a sole trader is the simplest way to run a single person business.  There are no setup or registration fees.  Only simple records and accounts are required and you get to keep and are taxed on all company profits.  However, you will also be personally responsible for any debts that your company acquires, and as such your personal assetts could be a risk.

A sole trading business is usually small in size, with a low turnover, and few, if any, employees.

The majority of sole trading enterprises are in the service sector, including photographers, plumbers, hairdressers, shops, real estate agencies and bed & breakfast hotels. Some 24% of the UK’s 2.3 million size class zero businesses are in the construction sector and 18% are in business-related services.

Liability:  If the business fails, then the owner is fully responsible for all the business' debts.

Management: The owner's word is final.

Finance:  More often than not, owner's personal money.

Profits:  All profits belong to the owner.

Taxes Etc.:  Self employed status. Even if the owner doesn't draw on his profits they are still taxed. Losses can be offset against tax on other income.

Continuity:  If owner dies or retires, the business may crumble.