What a Sole Trader?
A sole trader describes any business that is owned and controlled by one person, although they may employ workers, e.g. a newsagent's shop. Individuals who provide a specialist service like hairdressers, plumbers or photographers, are also sole traders. The Advantages of Sole Traders
1. The firms are usually small, and easy to set up.
2. Generally, only a small amount of capital needs to be invested, which reduces the initial start-up cost. 3. The wage bill will usually be low, because there a few or no employees. 4. It is easier to keep overall control, because the owner has a hands-on approach to running the business and can make decisions without consulting anyone else. The Disadvantages of Sole Traders
1. 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. 2. Sole traders often work long hours and find it difficult to take holidays, or time off if they are ill. 3. Developing the business is also limited by the amount of capital personally available. 4. There is also the risk of unlimited liability, where the sole trader can be forced to sell personal assets to cover any business debts. What is a Partnership?
Partnerships are businesses owned by two or more people. A contract called a deed of partnership is normally drawn up. This states the type of partnership it is, how much capital each party has contributed, and how profits and losses will be shared. Doctors, dentists and solicitors are typical examples of professionals who may go into partnership together. The Advantages of Partnership
1.The main advantage of a partnership over a sole trader is shared responsibility. This allows for specialisation, where one partner's strengths can complement another's. For example, if a hairdresser were in partnership with someone with a business background, one could concentrate on providing the salon service, and the...
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