The advantages of being a sole trader are as follows;
They are easy to set up – There are very few complicated forms to fill in and sole traders can set up and run a business almost immediately. They are easy to run – The owner can do what they want, when they want, without consulting with colleagues, as they are 100% in control of the business. Tax advantages – Sole traders are taxed in different ways to other types of businesses, the main tax relief being NIC’s (National Insurance Contributions). They are cheap to set up – A lot of sole traders can set up their business with just hundreds of pounds, where as a PLC has to have £50,000 at least by law to set up one. Privacy – No information about the business has to be made public, and the only people that need to see information on how the business has been run and the profits it has made are the Inland Revenue and HM Customs and Excise. Flexibility – Although there are a lot of hours needed to be put in to run a sole proprietorship, sole traders get to choose when they work.
There are some disadvantages of being a sole trader too, and they are;
Unlimited liability – If a business set up by a sole trader fails, then their house and other valuable items could be lost. Illness – If the sole trader falls seriously ill, the business may have to be shut down. Lack of continuity – If the sole trader is to die, or doesn’t want to continue running the business, there is no guarantee that the business will survive, unless it is passed on to other workers or their children. Long hours – A sole trader takes on the responsibility of running and managing a business, and for this to be done the sole trader will have to sacrifice a lot of long hours.
In a partnership there are usually...