A Sole Trader operates a business or invests under his or her own name or registered business name. The Sole Trader makes all purchases of equipment, rents premises and employs the staff necessary to establish the business.

The Sole Trader derives all income and is liable for all costs.

The profit is declared as income in the Sole Trader’s individual tax return. Tax is paid at individual rates of tax.

The Sole Trader can be considered to have the following advantages:

  • There are minimal costs involved in administration of the business structure.
  • All monies earned by the business are the property of the Sole Trader.
  • The Sole Trader has complete control of the operations of the business.

The Sole Trader has the following disadvantages:

  • It is costly and sometimes difficult to draw on the technical expertise of others.
  • The Sole Trader is personally liable for all business debts and thus may find personal assets have to be used to satisfy business debts.
  • All income of the Sole Trader is subject to taxation in the hands of the Sole Trader.
  • The business is terminated or sold on the death of the Sole Trader.
  • In an increasing world of litigation, a Sole Trader has a commercial risk to any assets held in their name.

Book an appointment now to discuss your business needs by calling the team at ATOM Accounting & Taxation on 5452 7205.