Sole Tradership Overview
What is a sole tradership?
A business owned and operated by one person.
What is one key advantage of starting a sole proprietorship?
It is easy and inexpensive to set up.
What is the biggest financial risk of being a sole trader?
Unlimited liability, meaning the owner is personally responsible for debts.
What is the term for when a sole trader is held responsible for all the business’s debts?
Unlimited liability.
Who is responsible for making all the decisions in a sole proprietorship?
The owner/sole trader.
How does a sole trader benefit from independence?
They have complete control over all aspects of the business.
What challenge might a sole trader face when trying to grow the business?
Difficulty in raising capital or securing loans.
What is the legal status of the business and the owner in a sole proprietorship?
They are considered the same legal entity.
What type of liability does a sole trader have?
Unlimited liability.
Why does a sole trader enjoy a strong personal connection with their customers?
The owner often manages daily operations, building direct relationships.
Why is it difficult for a sole trader to take time off from the business?
The business depends entirely on the owner’s presence.
What type of financing does a sole trader primarily rely on?
Personal savings or loans.
What is the main advantage of being a sole trader?
Full control over the business and decision-making.
In what way is decision-making more efficient for a sole trader?
Decisions can be made quickly without the need for consultation.
How can sole traders struggle with skill limitations?
The owner must handle all aspects of the business, regardless of expertise.
What is the term for the right to keep all profits in a sole proprietorship?
Profit retention.
How are profits and losses treated in a sole proprietorship?
The owner keeps all profits and is responsible for all losses.
What advantage does a sole trader have in terms of flexibility?
They can adapt quickly to changes in the market or customer needs.
Why is succession planning a challenge for sole proprietors?
The business may have no continuity if the owner retires or passes away.
What is the typical structure of management in a sole proprietorship?
The owner manages the entire business.