Sole Trader
Sole Trader – Advantages
1. Easy to start Very few legal steps. You can start the business quickly.
2. Full control You make all decisions yourself. No partners to argue with.
3. Keep all the profit Whatever the business earns goes to you alone.
4. Personal service Customers like dealing directly with the owner. Builds trust.
5. Flexible You can change prices, products, timings anytime you want.
Sole Trader – Disadvantages
1. Unlimited liability If the business loses money or has debt, you must pay from your own money or property.
2. Hard to raise capital Banks may not give big loans. You mostly depend on your own savings.
3. Long working hours You do most of the work alone. Can be stressful.
4. No continuity If the owner becomes sick or dies, the business may stop.
5. Limited skills One person cannot have all skills (marketing, finance, management, etc.).
Why someone chooses to be a sole trader
They want full control.
They want to keep all profits.
They want to start small and simple.
They don’t want to share decisions with others.
Business idea doesn’t require a lot of money to start.
Did Mike make the right decision?
Mike’s choice to start as a sole trader was correct in the beginning, bro. Sole trader businesses are best for people who:
are starting a new small business
don’t need a lot of capital
deal directly with customers, like retail or personal services
Mike’s taxi business fits all this, so starting as a sole trader was the perfect move for him.
Why he is thinking of changing now
As the business started growing, Mike realized he might need a better structure. When a business expands, the owner might need:
more capital
help with management
someone to share responsibilities and risks
That’s why Mike began looking at partnerships.
What is a partnership?
A partnership is when two or more people agree to own and run a business together. They:
put in capital
help manage the business
share profits
In India, a partnership can have up to 20 partners.
Partnerships are easy to start. Mike can even form one with a verbal agreement, but a written partnership deed is much safer. It avoids fights about:
who invested what
how profits should be shared
roles and responsibilities
A written agreement keeps everything clear.