What is sole trader?

What is sole trader? What are their role? Please elaborate with examples.

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  • 1 十年前
    最愛解答

    When setting out in business, you will probably be setting up on your own, using your own personal capital to get started. If this is the case you will be known as a Sole Trader. The sole trader is the most simplest business to develop as it initially consists of only you (the one man band), and has very little legal formalities, obligations or constraints attached to this form ownership as opposed to other forms; in fact it is just a case of informing the tax inspector and contributions agency of your intentions and you can begin to trade. You also need only a small amount of capital and you're off!

    Remaining as a sole trader has many advantages, mainly being that you are able to give a more personal service to your customers and you are able to make changes within your business very quickly due to there is little or no bureaucracy there being only one person to make the final decision; so remember this fact and exploit it. Other advantages include having complete control over the business and its profits; you are able to use any money the business brings as you deem fit without having to justify your spending.

    However, as the expansion of the business depends on the amount of capital you are personally able to inject, you may find investing in the growth of my business very difficult as capital is often difficult to find. In addition, as a result of the inability to assist expansion, your competitors would have the edge over your business; for example, businesses with greater access to investment would be able to adapt more quickly to market demands leaving you struggling to compete. Larger organisations could change the prices without feeling the impact as much as the sole trader would.

    Multi-nationals would be able to cope with demand and supply more readily and far more quickly that a small sole trader, as greater investment would allow them to buy equipment, increase production, adopt new technology and develop new ideas. The pressure put upon the sole trader must not be ignored, and if you are thinking of becoming self employed as a sole trader you must address this issue as it could ultimately threaten the survival of your business.

    Apart from the pressures placed on the sole trader by the larger organisations, you are also fully liable financially, and the need for your business to examine the implications and consequences of bankruptcy or loss of personal possessions due to the sole trader accepting unlimited liability must also be considered. The larger you business becomes, the great risk will be.

    If you are considering setting out in business as a sole trader, then you need to take all these consideration on board. The key to success is to exploit the advantages of being a sole trader and take seriously the disadvantages. Secondarily, you will also need to plan well for the future deciding how you business might develop - would you consider a partnership arrangement or become a limited company? What would be the advantages?

    2007-01-07 10:47:50 補充:

    some more links for your reference:http://www.bytestart.co.uk/content/19/19_1/what-is...

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  • Jerry
    Lv 6
    1 十年前

    A sole trader is a business which legally has no separate existence from its owner. Hence, the limitations of liability enjoyed by a corporation and limite liability partnerships do not apply to sole proprietors. All debts of the business are debts of the owner. It is a "sole" proprietor in the sense that the owner has no partners. A sole proprietorship essentially means a person does business in their own name and there is only one owner. A sole proprietorship is not a corporation, it does not pay corporate taxes, but rather the person who organized the business pays personal income taxes on the profits made, making accounting much simpler. A sole proprietorship need not worry about double taxation like a corporate entity would have to.

    Most sole proprietors will register a trade name or "Doing Business As". This allows the proprietor to do business with a name other than their legal name and also allows them to open a business account with banking institutions.

    資料來源: Understanding Sole Proprietorships – Advantages & Disadvantages – Good, in-depth article.
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