A sole trader business is started by a single person that prepares the business plan and finance for the company. No legal formalities are required for a sole trader set up and the sole trader business can be closed at any time without legal formalities. Any individual can start a business and must be competent to enter in to a contract.
The main pros of a sole trader business are that it can be set up easily and quickly and all profits go to the sole proprietor. Any business can be decided upon without permission form others and the sole trader has independent control.
The main cons are limited capital resources, is the lack of variety of skills in the business as one person can’t be expert at everything. The sole proprietor is liable for all losses of business.
A Partnership is formed when two or more people set up a business and is easy to set up. A verbal agreement is enough to form but a written agreement is recommended.
Pros of a partnership are someone to share start-up problems with and it is easy to form. A partnership provides access to more skills and more effective decision making.
Partnership cons are that you have less autonomy and may not get your own way and differences in personal aims and objectives can cause issues. Decision making can also be slower due to the need to consult a partner.
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