A Sole Trader is one of the simplest business structures and is normally used where someone is in business on their own or as a self-employed person.
Whilst Sole Traders can have employees, it is the Sole Trader himself who is responsible for the running of the business. As a Sole Trader, you would:
- Have the right to make all decisions affecting your business
- Pay all tax on profits of the business
- Be responsible for debts and obligations of the business (without any limit)
- own the assets of the business
Whilst you have almost complete control over how the business is run, you are also liable for any debts that the business will have. For example, if the business is sued and ends up owing more money than it has to pay the debt, you can be made bankrupt and potentially lose your savings, house and other possessions.
Many businesses start as Sole Traders because of the lack of complexity in commencing as a business using this structure. However, serious thought must be given to whether this is the best structure for you both in terms of your legal liabilities and from a tax perspective.
Our corporate lawyers will be able to help you decide if this is the best approach for you, and can introduce you to tax advisors to take care of your financial needs.