Sole Trader’s balance sheet
An individual has the
right to conduct an enterprise and to pursue a profit. In fact we have no
obligation in law that requires the registration of a business in order to
conduct a trade.
A sole trader (also referred to as a ‘sole proprietor’) is a single owner business that has no juristic personality. As a comparative, a close corporation is an entity distinct from its members, where the property belongs to itself, and not to its members.
The sole trader is operated with full personal risk for the owner whose estate is liable for all the commitments of his business. The partners in a partnership are also personally liable for the debts of the partnership, but only to the extent that such liabilities cannot be met out of partnership assets. On the other hand, the members of a close corporation are not generally personally liable for corporate debts (although they could bind themselves as sureties to a creditor for some or all of the corporate liabilities). The trustees and the beneficiaries of a business trust, and the directors and shareholders of a company, are also generally not liable for the debts of the trust or company.
A sole trader (also referred to as a ‘sole proprietor’) is a single owner business that has no juristic personality. As a comparative, a close corporation is an entity distinct from its members, where the property belongs to itself, and not to its members.
The sole trader is operated with full personal risk for the owner whose estate is liable for all the commitments of his business. The partners in a partnership are also personally liable for the debts of the partnership, but only to the extent that such liabilities cannot be met out of partnership assets. On the other hand, the members of a close corporation are not generally personally liable for corporate debts (although they could bind themselves as sureties to a creditor for some or all of the corporate liabilities). The trustees and the beneficiaries of a business trust, and the directors and shareholders of a company, are also generally not liable for the debts of the trust or company.
It would not be helpful to distinguish between
trading and personal use assets when the individual is being sequestrated as
all the assets of the individual will form part of the insolvent estate!
A sole trader does not have shareholders,
directors, members, trustees, or beneficiaries. The profits of the sole trader
are his own and taxed as such. The sole trader will therefore not have retained
earnings, undistributed profits, or share capital.
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