Sole proprietorship – advantages and disadvantages

If your business is small and the capital investment is minimal, you might consider operating as a sole trader.

A sole trader has the following advantages:

• you’re the boss

• you keep all the profits

• start-up costs are low

• you have maximum privacy

• establishing and operating your business is simple

• it is easy to change the legal structure of your business later on if circumstances change.

Disadvantages of sole trading include that:

• you have unlimited liability for debts as there’s no legal distinction between private and business assets

• your capacity to raise capital is limited

• all the responsibility for making day-to-day business decisions is yours

• retaining high-calibre employees can be difficult

• it can be hard to take holidays

• you’re taxed as a single person the life of the business is limited.

Thinking it’s time you made a change of accountant, please give us a call (07) 3804 7575. With over ten years of combined experience working with a diverse range of clients, Accountants 360 is well equipped to assist your business. We offer Bookkeeping and Tax Services and would love to help you succeed.