Sole Traders Advantages And Disadvantages

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Sole traders are business organizations which are commonly formed by one individual who obtained all of the benefits and risks of having total control and the ownership of their business. There is no legal difference between the properties and debit of a business and those of its owner, making it the most favored business structure for startups given its ease of development, minimumrecord-keeping and regulatory controls and avoidance of double taxation.

Of all business organizations, it has its own advantages and disadvantages. Firstly, the owner can keep the profit as there is no requirement for workers and assistants due to the small size of the firm. With it, the owner will be able to collect a considerable amount of money which will be
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Fifthly, it has lack of job specialization for other services in the business such restaurant with no financial organization skill.

Lastly, it requires commitment as the proprietor has the sole right on profit from the business, hence he tries to work harder to earn more profit. Consequently, the owner becomes unmotivated. As a result, their health is severely affected along with poor social relations with the relatives.

A registered company is an association of persons that carry out a commercial or industrial enterprise. Companies have some advantages compared to sole traders. First among them, it has separate legal entities for which shareholders can’t be sued.

Secondly, it has limited liability as ifthe company gets sued and then loses the case in the court, they only lose some of their assets, thus saving most of their belonging from being used to pay the compensation after being sued by the consumer.

Thirdly, large amounts of capital can be raisedwhere they can make big profits through mass
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These include registered companies being very expensive and complex to create. When the company hires more workers, it will increase the cost of the company, due to the fact that the profit will need to be split up, where some of the income is handed over to the employer and staff whereas another portion is handed over to the workers as wages. Not only that, an increased number of staff will lead to bureaucracy which deteriorates the decision-making process.

Secondly, most of thepublic account details must be prepared annually. This is because if the company is caught funding projects outside the law or even caught embezzling, they will be sued by the public; thus causing the government to begin the investigationsinto any wrongdoing.

Thirdly, most shareholders have less control as small stocks whilelarger institutions have the power. In theory, the company is democratic, but in practice it is controlled by oligarchy when few persons hold authority in order touse the mass. Thus, it does not promote the interest of the shareholders in general.

Fourthly, the company is vulnerable to take-over, which is a term that only occurs when other companies have made efforts to assume control of the undervalued private company through purchasing by majority stakes. As a result, the owner and managers lose control of their
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