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Sole Traders
Sole Traders are on of the Forms of The Private Sector, learn more about it here!
Author:
Krish Beachoo
Edu Level: CSEC
Date: Jul 12, 2023
⏱️Read Time: 2 min
What is a Sole Trader?
This is a SINGLE person who has full ownership of a business, he bears all the responsibilities of managing the business, get the luxury of keeping all the profits (he/she is not required to share profits) and assumes the risk of settling all debts.
A sole trader, however, may receive assistance from his/her family and friends.
How do you form a Sole Trader?
It is a very simple business to set up as it does not require any legal formalities. However there are a few things the business must do:
- The trade name of the business must be registered.
- He/she may require specific a license (example: for the sale of alcohol and food).
Other than that, the formation of a Sole Trader is very easy.
As with everything, there are Pros and Cons.
| The Pros | The Cons |
|---|---|
| No sharing of profits, he/she can keep all. | No sharing of losses. |
| Has a personal relationship with clients/customers. | There is no fixed income of a sole trader, it may vary based on demand. |
| Sole Traders have Unlimited Liability (meaning their debt settlement may extend to their personal assets). | There is usually a limited amount of Capital. |
That’s the basics!