Sole Traders

1. SOLE TRADERS:

Sole tradership is the simplest most common form of business organisation in Lesotho. Here, an individual undertakes to operate a business in his own name. Although the individual still has to comply with the requirements of the law, there is however a minimal amount of legislature (law) to comply with compared to other forms of business.

Establishment Procedure: Like other forms of business, the law requires that a sole tradership be registered with the Ministry of Trade and Industry, Cooperatives and Marketing in order to obtain either a manufacturer’s or trade licence.
Normally the issue of licences is governed by the Trading Enterprises Order, 1987 and the Trading Enterprises Regulations, 1989.
Finance: In most, if not in all instances, the financing of the sole tradership will depend on the trader’s personal credit.
Continuity of existence: Generally, the business is tied to the trader as a result it dies with him.
Limitation of liability: as a matter of law the trader is personally liable for the debts of the business. Meaning that creditors can claim against the trader’s estate should he fail to pay his debts.
Control of the business: Since the sole trader owns the business in its entirety, he is the one who gets to make all the decisions.
Formalities: administration is simple and costs are low.
Tax implications: The trader as a matter of law must apply to be registered with the Lesotho Revenue Authority for Individual Income Tax (IIT). Tax implications are both positive and negative. One the one hand, tax losses may be offset against the trader’s other income. On the other profits from the business will be taxed at the sole trader’s marginal income tax rate which may be higher than the business tax rate.
Cessation of business: It is generally simple to cease to carry on a sole tradership and the profits from the business remain with the trader.

Is the above business entity for you? Then do not hesitate to consult us at Corpro Solutions, we see you through the registration process.