S2 BDL - Sole Trader/Functional Areas Assessment Revision

A ​ (a)   is a business that is owned and run by one person. There is only one owner, but they may have employees who work for them. Sole traders are usually start-ups or small businesses. For example, photographers, electricians,​ (b)   , graphic designers, social media influencers, bloggers, small online clothing brand owners and beauty therapists may set up as sole traders.

Sole traders have ​ (c)   and the owner is personally responsible for the ​ (d)   of the business. A sole trader pays income ​ (e)   on their earnings.

• sole trader
• sales
• partnership
• hairdressers
• Tesco
• unlimited liability
• limited liability
• debts
• profits
• tax

How many people own a sole trader business?

• 3
• 2
• 1
• 20

A sole trader is

• a business with one employee
• a business selling one product
• a business with one owner
• a business with one shop/office

What is unlimited liability?

• If the business fails you will not lose personal possessions
• If the business fails you will lose personal possessions

A sole trader has responsibility for

• preparing the accounts of the business
• all aspects of their business
• selling the products
• completing spreadsheets

A sole trader has to share the profits made by the business. True or False?

• True

• False

Select TWO true statements that relate to a sole trader.

• Sole traders have limited liability

• Sole traders get to make all their own decisions about the business

• Sole traders may find it harder to raise funds for the business

• Sole traders usually get more holidays than partners or directors

Unlimited Liability is

• The owner has to pay off all the debts of the business. To the extent that their private assets may be sold to cover the businesses debts.

• When a company's shareholders have to pay only their share value to meet debts incurred by the company.

What are 3 of the benefits of being a sole trader?

• Easy to establish

• Keep all the profit

• Get to make all the decisions

• Unlimited liability

A disadvantage of being a sole trader is

• a heavy workload creates stress and pressure
• a second opinion on important decisions is always available
• arguments and disagreements can harm the progress of the business
• the owner gets a smaller share of the profits