The first question is what is a sole trader? A sole trader business structure is common considering its advantages and how easy the set-up is. The sole trader operates the business as a single individual, there is no legal distinction between the owner and the business. Compared to other business structures being a single trader can be the most convenient solution.
You Can Easily Start With Experience
Starting of sole trading is right away depending on the federal and state business registration procedure. In some states, you may not be required to file any papers. Although a business permit and license are necessary. Starting a business with partners requires you to register the business as a company as (doing business as) name, which is a long process.
You don’t have to file any articles of incorporation, reports, and exhibits when you start your business. There is no need of paying legal fee to a lawyer to get your business started. With less paperwork and simple documentation, your business will be up and running. You can save on registration fees compared to other business structures since there are fewer legal requirements.
You Get Proper Control of the Business
In a sole proprietorship, you are your boss meaning you have full control of the business. You get to manage the daily operations. Within the first three months of starting the business, you are legally self-employed. It becomes easy to plan and set yourself to achieve your business goals. When it comes to decision making you call the shots, there are no partners or a board of directors to consult.
The ownership belongs to one person and that’s you. If you decide to close down the business, you can sell all the assets without getting permission from anyone. The owner does all the hiring and firing without seeking approval from anyone. This freedom of control enables owners to experiment before committing to the regulations of running a limited liability company.
You Do Not Have To Deal With Complex Tax Issues
You and your business are viewed as one, your business is your income. Your business isn’t taxed separately like in other business structures. You only pay taxes on your business profits which is a deduction of your professional income and expenses.
Other business structures need to apply for an employer identification number while a sole trader is not required to file an EIN. The sole trader is taxed as a pass-through entity. It is easy to file your taxes than involving an accountant because the process is simpler.
You Get the Needed Privacy
In a limited company, all the company’s details are available for public inspection on the website. Anyone can access the database and search your company’s details. On the other hand, a sole trader is granted privacy by tax payer’s confidentiality rules.
Your competitor is not able to gather any information about your business since your information is not visible. There is no government record of the start of the business or of its continued existence. All the secrets and affairs of the business are only known by the owner.