Key Differences Between Self-Employed and Sole Proprietor
A self-employed individual works for themselves and is paid directly by their clients. On the other hand, a sole proprietor owns a business by themselves and does not work for a company; instead, would earn income by contracting services or goods.
Sole Proprietorship Overview
- The simplest business form is the sole proprietorship.
- A sole proprietorship is owned and run by one person.
- When the business grows, it becomes necessary to formalize it.
Sole Proprietorship and Independent Contractors
- Sole proprietors and independent contractors are self-employed individuals.
- Contractors do specific tasks for clients for a fee.
Sole Trader vs. Individual
- A sole-trader is a self-employed person who is also the business’s sole owner.
Being a Sole Trader
- A sole trader business is the simplest business structure to run.
- A sole trader is personally liable for all debts of the business.
Sole Trader vs. Limited Company
A sole trader is owned and controlled by one individual who has unlimited personal liability for the business, whereas a limited company will have its ownership divided into equal shares.
Sole Trader and Self-Employed Distinction
- Day to day, there is little distinction between self-employment and being a sole trader.
- The terms “sole trader” and “self-employed” are often used interchangeably.
Sole Trader vs. Self-Employed
- A sole trader is a business structure, and self-employment is the way you work.