Private sector businesses.

Authors Avatar

Private Sector Businesses

Sole Traders

Sole traders are the smallest type of enterprise. This type of business is owned by one person, although he or she may employ other people to work in the business, he has complete control over the business and takes home all the profits. A sole trader is someone who decides to own and run his or her own business and most probably uses her own saving as capital to start it up. This type of business is easy to set up and there are no formal procedures to follow.


  • If the firm is successful then the owners reward is the profit.
  • Ideally suited for offering a personal service to customers.
  • Bad (unpaid) debts can be avoided as the customers are usually known to the owner and most transactions are usually for cash rather than credit.
  • The sole trader can be flexible as to which days to work and working/opening hours.
  • Unlimited liability means a lot less paper work because they don’t have to pay corporation tax.


  • Long working hours.
  • Illness and sickness can cause problems to the business – when closed it makes no money.
  • Highly dependant on the skills or ability of one person.
  • Difficult to raise capital to start up or expand the business.
  • Unlimited liability can be devastating for a sole trader considering he is the only one the law takes action against (unincorporated).


A business partnership is set up by at least 2 people and up to 20. The partners jointly own the business. Business partnerships are often formed by people with different skills, so a greater range of services can be offered (the mastermind effect). In most partnerships all the partners play an active part although there maybe one or two sleeping partners who have invested in the business but do not want to work in the business on a day-to-day basis. It is sensible for the partners to sign a deed of partnership which sets out the details of the partnership agreement, such as the salary of each partner, the share of the profit each one receives and the procedure to follow if there is a dispute.

Join now!


  • Problems can be shared and discussed (“A burden shared is a burden halved”).
  • New skills and ideas can be introduced.
  • It is easier to raise capital as all the partners contribute.
  • There are obvious benefits to be gained by combining the knowledge and expertise of all partners.
  • The partners can specialize in their own particular are of expertise (for example, in a legal practice, one partner may specialize in family law, another in litigation and another in business law and so on).
  • Unlimited liability means a lot less paper work because they don’t have to ...

This is a preview of the whole essay