Sole trader
A sole trader is an individual carrying on business on their own account. The person and the business are generally not separate legal persons, although business transactions are accounted for separately under the business entity concept. The owner normally retains the profits after tax but is also personally responsible for business debts; the accounting separation does not create limited liability.
Worked example
A shop owner records goods purchased for the shop separately from their household spending.
Common mistake
Treating a sole trader as a limited company or ignoring the owner’s personal liability.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA4 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: sole proprietorship