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.