Definition

A sole trader (or sole proprietor) business is one which is fully owned by one individual. Although the owner can employ other staff, the owner retains full responsibility and ownership for the business.

Advantages of a Sole Trader Business

• Decisions are made by the owner.
• All the profit is kept by the owner.
• Sole trader businesses are usually easy to set up.

Disadvantages of a Sole Trader Business

• Capital must be raised by the owner either from savings or from a loan.
• Sole trader businesses have unlimited liability.
• Unless the business has employees, it will be unable to run if the owner is ill or on holiday.
• The business has a lack of continuity - in the death of the owner, the business would have to close.