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Advantages And Disadvantages Of Being A Sole Trader

1177 Words5 Pages

According to an informal survey conducted by Inc.com, nearly 600,000 new businesses are founded each year. When an individual or a group of people creates a company, they follow the process of what we call "the formation of a company". The formation of a business is the process that each sole proprietor has to follow in order to register a business as a legal entity with Companies House. Moreover, those people sole traders) take the risk and set up their own company for several reasons. Having a business has many benefits. For instance, you have the control of your destiny, you challenge yourself, you follow your passion, and you give back to your community. On the other hand, owners can face several problems and difficulties. Thus, there are disadvantages as well. The most known disadvantages are the company can be expensive to establish and the sole trader has very long working hours. The sole trader is a kind of business entity. This type specifically has one individual as an owner. To set up a new company, the sole trader should …show more content…

Liability is one of them. “Self-employed individuals are not considered as an independent organization by the law. Therefore, they are seen as being unaccountable.” Disadvantages of a Sole Trader Johnathan Korchak. Secondly, the sole trader face some difficulties in sponsoring his business. As a result, he may have issues when enlarging his company in the future. “Thirdly, owners find it difficult to have customers. Sometimes clients do not like to deal with sole traders because they think it is risky. In addition, clients like to deal with limited companies because it is more prestigious.” Disadvantages of a Sole Trader Johnathan Korchak. Consequently, before setting up his business, each owner should do researches into his market to study the potentiality of clients to see whether he ought to start a sole trader or launch a limited

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