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Advantages and Disadvantages of being a Sole Trader

As a Sole Trader you are responsible for settling all liabilities therefore there is less paperwork required and it is less complicated. Other advantages of being a sole trader are as follows;

  1. As a sole trader, you don’t need to notify Companies House or deal with any of the administrative responsibilities required of limited companies.
  2. As a sole trader it is easier to set up supplier accounts, obtain a loan because a Limited Company will have less assets to back up business debt, while  a sole trader has both the business assets and the owner’s personal assets
  3.  It is an easier concept for individuals to grasp when they start their business.
  4. Can be sensitive to the needs of customers – since you are closer to the customer and will react more quickly.
  5. Business affairs are private – competitors cannot see what you are earning, so will know less about how the business works and how it succeeds

The disadvantages of being a sole trader are

  1. Raising capital for a Sole Trader from unrelated investor (and not a bank) can be more difficult, having said this with Sole Trader Accounts prepared by a Tax Accountant .
  2. As a business grows the risks of financial difficulties increase and the Sole Trader has unlimited liability for business and personal assets.

How we can help

If you would like to discuss any of the above please contact KRA Bushey Accountants by entering your details on this link LINK   so we can arrange a No obligation FREE initial meeting at your premises or our office to carry out a business review.

If you are interested in instructing us we will offer you a FIXED FEE accountancy service with no hourly charges or hidden costs.