Sole Proprietorship

A sole proprietorship, also known as a sole trader, is a type of business structure in which the business is not incorporated and is owned and run by one individual. This individual is responsible for paying personal income tax on the profits earned by selling goods and services. 

What is an example of sole proprietorship?

Some common and popular examples of sole proprietorship include small businesses, independent contractors (freelancers), and consultants due to their ease of establishment. It is ideal for getting things up and running quickly, as time is of the essence in today’s economy. This is how many small businesses start, and as they grow, they can either stay as a sole trader or shift to another business structure. 

An important note is that although the individual, as the owner, has complete control of the business decisions from strategy to operations, the owner is not deemed separate from the business, which means the owner is liable for any debts or losses of the company.

This is why many small businesses later incorporate their company as it grows, separating the business and the owner into two legal entities. 

Learn more about which business structure will suit you best as you start your business venture in the UK.