Sole Trader Basics
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Questions and Answers

What is the primary characteristic of a sole trader?

  • Operates as part of a partnership
  • Has shareholders and board of directors
  • Employs a large workforce
  • Runs their own business independently (correct)
  • Which of the following best describes the financial liability of a sole trader?

  • Limited liability for business debts
  • Corporate liability only
  • Unlimited personal liability for business debts (correct)
  • Shared liability with partners
  • Which statement about a sole trader is false?

  • They can make all decisions independently
  • They must operate with at least one business partner (correct)
  • They retain all profits made from the business
  • They can employ people to help in their business
  • What advantage does a sole trader often have compared to larger business structures?

    <p>Simpler decision-making processes</p> Signup and view all the answers

    Which of the following is NOT typically associated with being a sole trader?

    <p>Requirement to file corporate tax returns</p> Signup and view all the answers

    Study Notes

    Sole Trader

    • A sole trader is a self-employed individual who runs their own business.
    • They are responsible for all aspects of the business, including finances, legal obligations, and operations.
    • Sole traders are not separate legal entities from the owner, meaning the owner is personally liable for all business debts and obligations.
    • The business is typically small and operated on a personal basis.

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    Description

    This quiz explores the concept of a sole trader, a self-employed individual who manages their own business. It covers aspects such as personal liability, business operations, and legal responsibilities. Gain a comprehensive understanding of the sole trader structure and its implications for small businesses.

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