Legal status

What are the disadvantages of operating as a sole trader?

The disadvantages of operating as a sole trader include:

• A sole trader has unlimited liability for the debts of the business. This means that if your business fails, your personal savings and assets could be at risk.
• The level of finance available to sole traders can be limited and businesses with greater access to funding may have an advantage.
• There is an argument that limited company status is more prestigious and as such might have a more positive impact on suppliers and customers.