Sole trader: A sole trader describes any business that is owned and controlled by one person.
Partnership: Partnerships are businesses owned by two or more people.
Advantages of being a sole trader:
It is easy to set up as no formal legal paperwork is required.
Generally, only a small amount of capital needs to be invested, which reduces the initial start-up cost.
As the only owner, the entrepreneur can make decisions without consulting anyone else.
Disadvantages of being a sole trader:
The sole trader has no one to share the responsibility of running the business with. A good hairdresser, for example, may not be very good at handling the accounts.
Sole traders often work long hours. They may find it difficult to take holidays or time off if they are ill.
They face unlimited liability if the business fails
Unlimited liability: The owners of a business are personally liable for any debts the business may have.
Limited liability: The liability of the owners of the business, the shareholders, to pay off its debts is limited amount of money they have invested into the business when buying shares.
- Features of unlimited liability: No difference between their own finance and the business’
- Do not have to share ownership
- All profits go to the sole trader.
I would rather choose to have a partner in business. This is because being a sole trader means there is no difference between your own finances and the business’, this would be terrible if the business failed. Also, you wouldn’t have free time you’d always be working