Are sole traders liable for company debts?


Hi, I am trying to find out whether I have any sort of financial liability operating as a sole trader. I know that limited companies have got protections in place to avoid falling into debt if the company goes insolvent. Does the same sort of rule apply for sole traders? Cheers



Sole traders have unlimited liability so they are personally liable for all business debts. Unlike the owners of a limited company, a sole trader has no financial protection in the form of limited liability. This is why a limited company structure is better for businesses that deal with higher value contracts or carry out activities that could potentially cause harm to people or property.

2 years ago

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