SOLE
TRADER BUSINESS STRUCTURE- ADVANTAGES/ DISADVANTAGES
Simplest way to start in business. | |
Easy to form and terminate. | |
Simplicity- few legal formalities, therefore
cheaper. | |
Low start up costs | |
Owner has independence |
Relatively little regulation and paper work. | |
All profits go to owner. | |
Possible tax benefits- will be taxed at lowest personal marginal
income tax rates, and losses in the business can be offset against other
personal income. | |
Financial Statements do not have to be shown publicly, and do not
have to be audited. |
Unlimited liability for owner, who is personally liable for the
debts of the business-personal assets can therefore be at risk. | |
Owner is responsible for negligent acts and other wrongs committed
by employees within the scope of the business activity. | |
Harder to raise capital than other forms of business ownership-
owner may have to give personal guarantee or security over personal
assets. | |
Working by yourself means that there is a limited amount of skills,
experience and management expertise readily available. | |
Lack of continuity- when give up the business ceases. | |
May be difficult to sell and get good price as it may be the case
that a lot of the goodwill has been created by the efforts and personal
relationship of the owner with the customers. |
If we can assist further, please email TotalAccounting as follows:
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