Sole tradership

An unincorporated business entity with a single owner. The business may be under the owner’s name or a registered business name, but in either case, the owner and the business are legally inseparable.

The advantages of sole tradership include:

  • It is cheap to set-up
  • It is simple
  • No need to rely on others (independent)

The disadvantages (often realized when the business grows) include:

  • Unlimited liability – owner’s assets may be required to pay business debts
  • Personal tax rates = potentially higher tax
  • Illness or incapacity curtails the business
  • Death of the sole trader often practically means cessation of the business