A sole proprietorship, otherwise known as a sole trader, is a type of business which involves a self-employed person. This person runs and owns their business, and there is no legal distinction between the person who runs the business and the business itself. The individual who runs the business is the only person who owns it, and therefore suffers the losses, or reaps the benefits, of the business. Here are some examples of a sole proprietorship, or a sole trader, as it is often easier to understand a concept if you have examples to illustrate it.
• A plumber
If a man or woman is qualified to the extent that they can carry out safely and correctly all of the duties of a plumber, then they may wish to become a self employed plumber. As a result, the man or woman would not work for anyone but themselves - they would decide their own hours, their own charges for services to customers, and would provide their own equipment for the job.
• A grocer
A person who owns their own grocery store, independent from large chains such as Wal-Mart, would be classed as a sole proprietor. They decide where to purchase their stock, how often to schedule new deliveries of stock and whether to hire other workers.
• A taxi driver
If a man or woman bought and licensed their own taxi cab, and did not work with a named taxi company, then they would be a sole proprietor. As with a plumber or a grocer, the taxi driver would decide what hours they wish to work, as well as deciding where to buy their car from, and whether to expand their one-car business into a fleet.
• An electrician
A self-employed electrician would be faced with almost exactly the same decisions as a self-employed plumber, and would be classed as a sole proprietor.
• A freelance writer
If a writer was not hired on a signed contract, to write on a regular basis for a particular magazine, website or other publication, then they would be classed as a sole proprietor. They would decide what company or publication they wish to approach with their writing, how much they would be willing to sell it for (although this would be decided by a two-way negotiation), and how often they are willing to write.
• A plumber
If a man or woman is qualified to the extent that they can carry out safely and correctly all of the duties of a plumber, then they may wish to become a self employed plumber. As a result, the man or woman would not work for anyone but themselves - they would decide their own hours, their own charges for services to customers, and would provide their own equipment for the job.
• A grocer
A person who owns their own grocery store, independent from large chains such as Wal-Mart, would be classed as a sole proprietor. They decide where to purchase their stock, how often to schedule new deliveries of stock and whether to hire other workers.
• A taxi driver
If a man or woman bought and licensed their own taxi cab, and did not work with a named taxi company, then they would be a sole proprietor. As with a plumber or a grocer, the taxi driver would decide what hours they wish to work, as well as deciding where to buy their car from, and whether to expand their one-car business into a fleet.
• An electrician
A self-employed electrician would be faced with almost exactly the same decisions as a self-employed plumber, and would be classed as a sole proprietor.
• A freelance writer
If a writer was not hired on a signed contract, to write on a regular basis for a particular magazine, website or other publication, then they would be classed as a sole proprietor. They would decide what company or publication they wish to approach with their writing, how much they would be willing to sell it for (although this would be decided by a two-way negotiation), and how often they are willing to write.