welcome entrepreneurs so in today's video this is the second of my third video that we're doing on forms of ownership and we're talking today about soul traders this is going to be a short quick video so make sure you watch it hit like subscribe and share it as quickly as you can if you haven't watched my first video that's our prelude to forms of ownership so make sure you understand that first because everything builds on the first video see you in the video all right entrepreneurs welcome back to our second video the first one was the introduction to forms of ownership you must make sure you understand those topics now we're gonna apply it today's lesson is all about the sole trader so you can see that as the bottom part the different forms of ownership are doing it and as you can remember from the first video is it the legal registered business no it's not it is not a formally registered business it is in brackets informal right so it's there's no registration so we're going to discuss this in this period again the terminology that we're going to be using is who provides a capital who's legally liable for the debts that means this person the owner is as unlimited liability another word is personally liable and this form of ownership there's no legal entity or personality and we're going to talk about continuity so firstly this form of ownership is either called the soul trader or a sole proprietorship right that means there is only one person that's running the show there's only one person that's a captain and this person really makes all the decisions himself it's quick it's easy he provides a capital himself he will do all the work himself he's the laborer he can hire people to work for him but in the beginning when it's small you have to do it yourself if i start the car wash business i will normally do most of the work myself plus i'll get all of the profits now another benefit is because i don't have to register i don't have to jump through oops and make sure that i have all the rigmarole and the legalities it's quick and easy to start right so characteristics let's summarize the owner is called you guessed it the owner it's quite easy it's established by one person no more that's cause it's a sole trader a one trader it's no continuity that means if me if i've got my car wash business and i stop washing cars will paul's car wash business continue no because there's no pull right so it's quite easy i have to provide the capital so that means if i have more people more partners in my business when we go into a next form of ownership i can't contribute the same amount of capital than they can one benefit of this form of ownership is that there's a lot of personal contact so i know exactly what's the demand of my consumers so when i wash your car i can hear oh you actually want me to valet yeah i can do that whereas with a big company and they've got people working for them it takes them a long time to get to that to understand the needs and the wants of the consumers and they actually have to do market research so they're not that's a big advantage of being an assault trader now here's the biggest disadvantage is i as an owner i am personally liable for the debts of the company you can see that a guy hanging by from a cliff saying ah there's debt if um that i take out the loan on behalf of or for my business for my college business and i buy equipment and i cannot repay the money the bank will come take my personal assets because here's the legal term again i am not a legal entity or the business is not seen as a legal entity that means me and the business is seen as the same person in the eyes of the law that means they'll come and take my assets because me and the business were one so i am personally legal or liable for the debts we said it's easy and cheap to start and there's no legal entity plus the profits that you get you get all profits plus you have to pay tax on your personal income tax now this can be a benefit if your income is small at the beginning but the more income you receive the higher the tax it can go up to 45 percent that's why we have to consider different forms of ownership which is at tax advantages but we'll get there right quick run through again just to recap advantage is quick and easy to start you can raise a lot of capital if you're on your own and if you've got a good credit record but it's not as much as a partnership or other forms of ownership i receive all the profit as a sole trader but i have to provide all the skills and cash capital and cash that's a good thing if i don't trust people but once you want to expand you need more people so then this is not a good form for you there's no formal registration documents required you have to carry all the risks if you like carrying less that's a good form of ownership for you and the business is not taxed the owner is tax individually so in the beginning the tax is less it's at 18 whereas a company tax is fixed at 28 so in the beginning it's better later on at the sliding scale you pay more tax so you want to consider another form the disadvantage is is the workload is so much you have to do everything yourself plus you're your worst boss say if you don't work you don't get paid so no one will pay your salary because you get a profit so you will not send yourself on holiday so the workload is a lot um next one is one once you're busy doing everything with the heavy workload you can forget some business functions we can have a detrimental effect we know there's no continuity you're personally liable for the debts and again if your business grows to such an extent your tax can be as high as 45 which is a massive disadvantage so this was a quick run through to sole proprietor i hope you understand it make sure to tune in to our next video next time which is going to be on sole traders i mean partnerships we've just done sole traders see you in the next video you