A sole trader is a person who is not incorporated and does not share the profits of the business with anybody else.
What are the advantages of setting up as a Sole Trader?
Control - as a sole trader you are the only owner of the business and therefore have total personal control. All business decisions, including accountancy and financial decisions can be made easily
Profit - as the sole business owner, all the profit belongs to you
Privacy - there is no statutory requirement to file annual accounts for public inspection. Competitors cannot see what you are earning and therefore will know less about how successfully your business is working.
Less Red Tape - there is no legal red tape to setting up as a sole trader. You just need to tell the tax office that you are now self-employed and, if you are using a business name other than your own personal name, register your business name
Change - it is reasonably simple to change from sole trader to a limited company in the future should you decide to do so.
What are the disadvantages of setting up as a Sole Trader?
Liability - you have personally liability for all businesses debts. If your business fails leaving business debts then you could lose your home or other personal assets.
Finance - because all finances are personal, banks may be more reluctant to lend larger sums