Where an individual operates a business as the sole person they are
generally referred to as a sole trader.
Becoming a sole trader is the simple and relatively inexpensive. A sole
trader has full control of all assets, makes all business decisions, is a
low cost structure and has fewer reporting requirements.
A sole trader has many characteristics, some of which are listed below
- Unless a business name is required, set up costs are negligible
- Administration is generally limited to bookkeeping and accounting
- A sole trader retains all the profits of their business
- A sole traders financial information is kept private
- A sole trader is legally responsible for all aspects of the business
- A sole trader is personally liable with unlimited liability
A sole trader business model is most popular with tradesman and specialist
service providers prior to commencing business as a sole trader
- determine if any form of authorisation or registrations are required
from regulators or local authorities
- consider managing the business separately by operating from a
separate bank account
- ascertain if business insurances are required or desirable
- find suitable premises to operate from within
As a sole trader business grows it is relatively easy to change this form of
business structure or to close a business operating as a sole trader.
Prior to deciding on a business structure seek professional advice from an
accountant, solicitor or business advisor to ensure that the structure
selected meets your personal circumstances and business objectives.
Please note: Prepared by Leigh Barker MWC Group, Accountant, Portfolio
Finance, Gordon, West Pennant Hills and Tangible Assets,. Note that all
content of this blog is general in nature and anyone intending to apply the
information to practical circumstances should seek professional advice to
independently verify their interpretation and the information’s
applicability to their particular circumstance.