The most popular and oldest type of business organization is the sole trader. It dates back to the dawn of civilization. This looks to be how the company began in the past. As science and technology progressed, business requirements grew, and new organizational structures emerged. A sole trader, also known as a sole proprietorship or a proprietorship, is an independent business with only one owner who pays personal income tax on business profits.
Given the lack of government regulation, a sole trader is the simplest form of business to start or shut down. As a result, these kinds of organizations are extremely popular among sole proprietors, independent contractors, and consultants. Because it isn’t essential to create a separate business or trade name, many sole owners operate under their own identities.
Because a sole trader is mostly reliant on his own resources, his business is typically small. Normally, the firm is conducted with the assistance of family members, but he may hire others to handle the daily operations. In terms of his legal liability, he has unlimited liability.
Creditors have a right to claim even on his personal property. The sole trader determines the company’s fate. The future of the business is determined by the trader’s abilities. His authority is limitless, and his choices are definitive. In fact, he is the company’s single organizer, controller, manager, and master.