Analyse how a business owner’s decision to operate as a sole trader may affect the planning...

Analyse how a business owner’s decision to operate as a sole trader may affect the planning for their business.

Expert Solution

Answer:-

Sole trader:- is one who makes a decision of starting, running the small business, it is an inexpensive way to go forward to plan for business.

decisions of a sole trader may affect the planning of business that are as follows:-

1. Liabilities:- if the decision of owners goes in the wrong direction which would lead to incurring of liability of assets, debts of the business go through the loss of the family home, bankruptcy, imposing legally etc have to face the consequences.

2. Image of a sole trader:- they may lead to a lack of image, the reputation of the company due to their decisions.

3. No deals:- sole trader will not get the attention of customers, (they lose interest) & get attract to other limited company.

4. Taxation:- There are so many restrictions in terms of paying taxes if the business runs smoothly ( i.e, due to profit) business can go well with maintaining the business structure.

5.problem of capital:- it is hard to cope up with investment plans for a sole trader for expansion of business due to the fact sole trader won't get long term finance to enhance the business.

6.problem of continuity of business:- due to some of the reasons a business can't go in the right direction that is because of accident, death etc of owners which leads to discontinuation of business.

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