A sole trader is a business which runs by only one person who is the owner and the builder of this company. It is also known as sole proprietorship or simply proprietorship. There is no clear difference between owner and the company. Owner handles each and every thing by himself without any employees to help or other persons. He direct and control all the elements and who is legally answerable and responsible for the finance of the company. When we talk about handling the finance it generally means everything related to it such as debts, losses and loans and every other such thing. He will be the only deserving person of the profits and gains of the company; he will receive all the information about taxes and payments. In short he will be a person who has hundreds of responsibilities to deal with.
This person can use a business name or a trade name for this business other than his name. He will have to get the name legally trademark. The process of trademarking the name is different in every country. Different countries also have different rules for these companies to work under. If unfortunately they come to financial crises or problems related to finance, different states deal with them in different ways to solve the problems.
Starting this type of business and becoming a sole trader is very much easy and simple in contrast with other businesses. This trading business can be started in a blink of an eye. The process and method of record keeping is very clear-cut and uncomplicated of this company, which is a hectic task in others. They take all the operational and managerial decisions for the company also plan how to increase the finance and the sales. It is not wrong to say that they are the core of the company. It is their responsibility to decide how much to invest in the business and from where to get these investments. They can also use their assets for investments. Because of the only one person and owner of the company there is no reason to share profits and no one to complain on the decisions taken by the owner.
There are many good and positive things about this trade but it also has many bad factors and it is not that simple as it sounds. There is no way to differentiate between the personal income of the owner and the income and profits of the company. Tax authorities do not understand any difference in both incomes. The owner will be only responsible person in case of debts and tax payments. Business advisers to advise these traders to have a limited company so that they can get great profits, this way they will be able to lessen their responsibilities. Business lenders will be more trusted in case of limited business.