Looking for a good sample?

Let us find the best one for you! What is your topic?

Over 850,000 documents to help brainstorm your essay topic

Haven't found the Essay You Want?
For Only $13/page

Sole Trader vs Private Limited Company Essays

Firstly, one of the main advantages of a Private Limited Company over a sole trader is that, members may enjoy the availability of Limited Liability, hence the business is incorporated (i. e. the business has a separate identity from the owner). Therefore, liability for payment of debts stops at the Company, and owners and shareholders are not personally liable for any other debts than that of which they have purchased. On the other hand, a sole trader’s liability status is unlimited and there is no distinction between personal and business money.

Hence if the business incurs debts, the sole trader will stand to lose personal assets. Another advantage that a Private Limited Company has over a sole trader is that the company has an unlimited life, while a sole trader lacks continuity. This means that in a company, years after some founding members have died or moved on, the company can still be operational while since the sole trader business is a personal one, if the owner dies, the business also dies. Thirdly, more capital can be raised as there are many owners or shareholders in the private limited company.

Being sole trader, however it is difficult to raise capital since only one person contributes money. Although, a Private Limited Company has many advantages over a sole trader, there are also a few disadvantages. One of this is that profits can be diluted because they must be evenly distributed among all shareholders. However, in a sole proprietorship all profits would go to the sole trader. Also a disadvantage with a Private Limited Company is it isn’t very easy to sell shares if a person wishes to do so.

Not only will it take time but it will be necessary for a buyer to purchase the share(s) form the previous owner. Shares tend not to be very transferrable, and the director’s consent must be given before any actions can commence. Where as, in a sole proprietor, there is no need for consent, no waiting as there are no shares to be purchased from a business. Lastly, there is a legal procedure to follow when establishing a Private Limited Company. This procedure is very time consuming and can also be very expensive. However, with a sole trader, no major legal formation is required.

Sorry, but copying text is forbidden on this website. If you need this or any other sample register now and get a free access to all papers, carefully proofread and edited by our experts.

Sign Up Login We can't stand spam as much as you do No, thanks. I prefer suffering on my own

Jasmine from Graduate Way

Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/eHrtS5

search icon Can’t Find Your Topic Here?

There’s no topic we can’t write on!

Get Paper Now
  • 24/7 Support
  • Safe Payment
  • 100% Unique Content