A sole trader is the simplest business structure to set up. It means that YOU (and ONLY you) are the business. You have full control and ownership of the entity and you make all the decisions.
- It’s easy to set up.
- It’s MUCH less expensive than setting up a company.
- There is less paperwork (in comparison to the other structures).
- There is less government interference and regulation (at least in comparison to a Company).
- It offers more privacy (in comparison to the reporting requirements of a Company).
- There is less need for hiring lawyers, accountants, and other consultants (at least in comparison to a Trust or Company).
Because the business is YOU, YOU are personally liable for any debts, negligent acts, etc that you commit while running your business. A Sole Trader is NOT a separate legal entity either, you assume ALL the risk and responsibility whether your business succeeds or not. For example, if your business were to go bankrupt, your personal assets (house, car etc.) can be used to pay off your debts.