A sole trader is a business that is owned by one person but it can have one or more employees.

All you have to do is offer a product or service for sale and you are a sole trader! No special paperwork is required, so a sole trader is able to start business immediately. There are many Advantage of Sole Trader but the following points are few of them as below

They are usually small businesses, so less money is required to set them up. The owner is in sole charge so quick decisions can be made without having to consult others. The owner gets to keep all of the profits; they don't have to be shared with others. Financial information can be kept private. The needs of local people can be catered for as can special tastes as the owner will know the local market.

The following points are the disadvantage of sole Trader If the owner becomes ill or goes on holiday the business may suffer. This can be less of a problem if the sole trader employs a manager or managers. How often the sole trader is prepared to leave the manager in charge will depend upon how much they trust them. Many sole traders work very long hours, as they may be the only ones who work for the business. It may be the case that they are motivated to work long hours because they are working for themselves and they will get the extra profits from their extra work.

Money can be difficult to raise as many banks and other lending institutions might be reluctant to lend to sole traders because they have a higher rate of bankruptcy.

Their prices are often higher than those of larger organizations. This is because sole traders tend to be small and are unable to buy materials in bulk and benefit from the lower prices this offers. Sole traders often join voluntary groups (such as Spar, VG, Mace and Londis) in order to be able to buy in bulk.

The biggest disadvantage for the sole trader is that s/he has complete responsibility for all the debts of the business. This is called unlimited liability. This means the owners might lose all of their personal possessions if they cannot pay the debts of the business, for example, if it goes bankrupt. A partnership is an agreement between two or more people to finance and operate a business. Partnerships, unlike sole proprietorships, are entities legally separate from the partners themselves. In a general partnership, however, profits and losses flow through to the partners tax returns. The shared ownership concept that characterizes a business partnership gives it certain distinct advantages and disadvantages. Partnerships are relatively easy to establish; however time should be invested in developing the partnership agreement. In a partnership agreement, the following arrangements, among others, should be spelled out: 1. How the business will be financed. 2. Who will do what work. 3. What happens if a partner dies.

4. What happens if one or both partners want to dissolve the partnership. Business Partnership Advantages Partnerships are relatively easy to establish. With more than one owner, the ability to raise funds may be increased, both because two or more partners may be able to contribute more funds and because their borrowing capacity may be greater. Prospective employees may be attracted to the business if given the incentive to become a partner. A partnership may benefit from the combination of complimentary skills of two or more people. There is a wider pool of knowledge, skills and contacts. Partnerships can be cost-effective as each partner specializes in certain aspects of their business. Partnerships provide moral support and will allow for more creative brainstorming. Business Partnership Disadvantages Business partners are jointly and individually liable for the actions of the other partners. Profits must be shared with others. You have to decide on how you value each others time and skills. What happens if one partner can put in less time due to personal circumstances? Since decisions are shared, disagreements can occur. A partnership is for the long term, and expectations and situations can change, which can lead to dramatic and traumatic split ups. The partnership may have a limited life; it may end upon the withdrawal or death of a partner. A partnership usually has limitations that keep it from becoming a large business. You have to consult your partner and negotiate more as you cannot make decisions by yourself. You therefore need to be more flexible.

 A major disadvantage of a partnership is unlimited liability. General partners are liable without limit for all debts contracted and errors made by the partnership. For example, if you own only 1 percent of the partnership and the business fails, you will be called upon to pay 1 percent of the bills and the other partners will be assessed their 99 percent. However, if your partners cannot pay, you may be called upon to pay all the debts even if you must sell off all your possessions to do so. This makes partnerships too risky for most situations. The answer would be a different business structure. Advantages of a limited company Whilst many businesses prefer to trade as a sole trader or a partnership, nearly all significant businesses operate as an incorporated company. The main advantages of incorporation via a limited company are summarized below: Separate Legal Identity A limited company has a legal existence separate from management and its members (the shareholders) Limited liability The protection given by limited liability is perhaps the most important advantage of incorporation. The members' only liability is for the amount unpaid on their shares. Since most private companies issue shares as "fully paid", if things go wrong, a members' only loss is the value of the shares and any loans made to the company. Personal assets are not put at risk. The protection of limited liability does not, however, apply to fraud. Company directors have a legal duty not to incur liabilities in their companies which they have reason to believe the company may not be able to pay. If creditors lose money through director fraud, the directors' personal liability is without limit. Protection of Company Name

The choice of company names is restricted and, providing a chosen name complies with the rules, no-one else can use it. The only protection for sole traders and partnerships is trademark legislation. Continuity Once formed, a company has everlasting life. Directors, management and employees act as agent of the company. If they leave, retire, die - the company remains in existence. A company can only be terminated by winding up, liquidation or other order of the courts or Registrar of Companies. New Shareholders and Investors can be easily introduced The issue, transfer or sale of shares is a relatively straightforward process although existing shareholders are protected via their "preemption" rights and by company legislation that seeks to protect the interests of minority investors. The process of lending to a company is also easier than with other business forms. The lending bank may be able to secure its loan against certain assets of the business (a "floating charge") or against the business as a whole ("fixed charge". Better Pension Schemes Approved company pension schemes usually provide better benefits than those paid under contracts to self-employed sole trading businesses. Taxation Sole traders and partnerships pay income tax. Companies pay Corporation tax on their taxable profits. There is a wider range of allowances and taxdeductible costs that can be offset against a company's profits. In addition, the current level of Corporation Tax is lower than income tax rates.