KeyPlay Business Solutions

Sole Traders

What is a Sole Trader ?

Perhaps the simplest type of business structure, an individual simply carries on a business without setting up a separate legal entity. The business can be in the individual's name, for example, ‘Jim Jones: Electrician', or use a registered name such as ‘Bright Spark Electrical'.
The advantages of to being a sole trader include low establishment and ongoing operating costs, and the structure is easy to understand and manage. Sole traders have relatively easy access to capital gains tax (CGT) concessions if the business is sold (including 50 percent discount and small business concessions). There's also straightforward methods for succession planning, as the business can be left in a will.
There are some disadvantages too. Because the business is not a separate legal entity, there's no asset protection or limitation of liability. And your business income is taxed at the individual's marginal rate (currently up to 46.5 percent). If services are provided by a sole-practising contractor to a single client, they might be regarded as an employee in certain circumstances.