The legal position enjoyed by a sole-trade business are as follows:
- The sole trading business can be started and dissolved at the discretion of the sole trader because no legal formalities are required for its set up.
- As there is no separate statute which governs the sole trading business, these are subject to the general laws of the land.
- The sole trading business exist with the sole trader as the sole trader and the business denote same thing and one.
- The liability of the sole trader is unlimited and as such no distinction can be made between business and private assets, business and private loans at the time of winding up.