LO1:sole trader

Question 1

what is a sole trader?

Answer 1

smallest type of uk business. it is owned and controlled by 1 person and not much money is required to set it up.

Question 2

examples of a sole trader?

Answer 2

hairdresser, small shops and local plumbers

Question 3

what is unlimited liabillity?

Answer 3

responsible for all debts, debts must be paid

Question 4

Advantages of a sole trader?
(5)

Answer 4

-the owner makes all decisions
-can respond quickly to changes in customer needs
-little capital
-easy to set up
-accounts can remain private

Question 5

disadvantages of a sole trader?
(5)

Answer 5

-costs are usually higher, resulting in higher prices
-extra capital may be hard to raise
-owner has unlimited liability
-difficult for the owner to take holidays
-owner may have to work long hours