SOLE TRADER BUSINESS STRUCTURE- ADVANTAGES/ DISADVANTAGES

ADVANTAGES

	Simplest way to start in business.
	Easy to form and terminate.
	Simplicity- few legal formalities, therefore cheaper.
	Low start up costs
	Owner has independence

Free to make own business decisions
Free to take time off when he wants.
Free to take holidays when he wants.

	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.

DISADVANTAGES

	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.

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