Editing Difference Between Sole Trader and Partnership

There are three main business structures -  sole proprietorship or sole trader, partnership and corporation. In this article, we will touch the topic of a sole trader. Here, we will differentiate a sole trader and partnership.

=== Sole Trader ===

A sole trader is also known as a sole proprietor. Its most basic definition is a business structure that is owned and run by a single individual. This individual invests money, property, assets, skills and labor in order to run the business. He/she may employ workers for the business, but assets and liabilities belong to him/her alone. A sole trader carries the risk of the business as all business contracts will be made under their name. He/she will also undergo unlimited personal liability as debts that the business cannot pay off will be made liable to the individual.

=== Partnership ===

A partnership consists of two or more legal entities that contribute resources, skills and labor for the purpose of profit. Like a sole trader, there is no legal separation between a partnership and its partners. This means that partners will be liable for any debts, losses or legal issues that the partnership will face. A partnership may consist of individuals, corporations, or even other partnerships.
{| class="wikitable"
|-
!  !! Sole trader !! Partnership
|-
| Definition || A business owned and run by a single individual || A business structure where two or more partners contribute resources, skills and labor to earn profit
|-
| Number of owners || 1 || At least 2
|-
| Owners || Sole trader/sole proprietor || Partners
|-
| May consist of || Sole trader, employees || Partners, employees
|-
| Owners’ means of income || Withdrawals from the business; net income from the business || Profit sharing or salary, the latter sometimes preferred by industrial partners
|-
| Taxation || No business tax; owner is taxed through individual income tax returns || Partners are taxed based on the profit they earn
|-
| Separate entity? || No || No
|-
| Liability || Unlimited || Unlimited
|-
| Advantages || Lack of conflict, single source of authority, owner keeps all the profits, simple structure || Ease of startup, split costs, support from other partners, equality in ownership and management
|-
| Disadvantages || Unlimited liability, no legal distinction, taxed as individual, stress from managing business alone || Unlimited liability, shared accountability for debts, losses and legal matters, possibility of internal conflict
|}
=== Venn Diagram ===
[[File:Difference-Between-Sole-Trader-and-Partnership.png|center]]