Sole proprietorship – advantages and disadvantages
Consider operating as a sole trader if your business is small and capital investment is minimal.
Advantages of sole trading include that:
- 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’s easy to change your legal structure later if circumstances change you can easily wind up your business.
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.