If you are considering starting your own business, a sole proprietorship may be an option for you. So, what is a sole trader business? A sole trader or sole proprietorship business is any business that is founded by an individual. The solo founder establishes the company without a management team. He can certainly employ staff.
The sole trader owns his company 100% and can make decisions without coordinating with a co-owner or co-manager beforehand. Before you start with sole proprietorship, you should carefully weigh the pros and cons before settling on this legal form.
What Are the Advantages of Sole Proprietorship?
Decision-Making Power, Creative Freedom, and No Profit Sharing
As the founder of a sole proprietorship, you are completely flexible and have the greatest possible scope for your company. You can always make decisions by yourself. There is no need for an agreement with other shareholders, etc. Furthermore, you do not have to share your profits with anyone; your company’s profits are entirely yours.
Lower Start-Up Costs and Less Bureaucracy for “Non-Merchants”
Depending on what kind of sole proprietorship you want to run, you can do without specific foundation modalities. Freelancers and small businesses have the advantage over registered business people. They don’t need an entry in the commercial register to set up their sole proprietorship; Non-merchants benefit from less bureaucracy and can save the fees for registering with the business regulatory agencies in your region.
Simple Bookkeeping, No Accounting
As a sole trader who is not registered with the relevant business regulatory body in your region, you are not required to account for the balance sheet and can conveniently carry out your bookkeeping. This can also save you costs and time.
No Minimum Capital
To become self-employed with a sole proprietorship, no minimum or share capital is required. As with other business forms, you don’t have to pay a certain amount into your business account, but you can start straight away without a lot of equity. As a sole trader, you are not dependent on bringing in the fees needed for an LLC model and perhaps even applying for a loan for it. You can begin your business with the capital you need to make your dream come true.
The only downside for a sole proprietorship is that it requires high responsibility, there is no limitation of liability, and an imaginary name is not possible as a company name. How about you try this model to enjoy the benefits.