What does the term 'sole trader' refer to?

The term 'sole trader' specifically refers to an individual who runs a business independently. This structure allows a person to operate their own business without forming a separate legal entity, meaning that they retain full control and keep all the profits. As a sole trader, the individual is personally responsible for the business's debts and obligations, distinguishing this setup from other business forms like partnerships or corporations, where multiple entities share control, liability, and profits. This independence is a hallmark of the sole trader model, making it an attractive option for many small business owners seeking simplicity and a direct relationship between their personal and business finances.