The sole trader
A sole trader consists of one person, who is in business on his own account. He is referred to as being self-employed.
- The business and its owner form one legal entity.
- This is a very flexible way to trade, and there are more sole traders than any other business structure in the UK.
- The sole trader is personally liable for all the debts of the business; if the business fails, he may go bankrupt.
- All the profits of the business are taxed as if the personal income of the sole trader.
- The sole trader may employ staff, but he is not an employee.
- A sole trader cannot rent his own property to his business as he and the business are one and the same (he cannot charge himself rent).