Which type of company structure is similar to a sole trader but has limited liability?

A proprietary or private company is characterized by its limited liability status, which distinguishes it from a sole trader. A sole trader operates as an individual, meaning they have unlimited liability. This means that if the business incurs debts or is sued, the owner's personal assets are at risk. In contrast, a proprietary company limits liability to the amount that shareholders have invested in the company. As a result, personal assets of the owners are generally protected from business liabilities.

Additionally, a proprietary company can have up to 50 shareholders, whereas a sole trader operates alone or with minimal collaboration, without forming a separate legal entity. This structure allows for greater flexibility in management and potentially better access to capital through shareholder investment while still maintaining the advantages of limited liability. Hence, the proprietary company structure combines some of the traits of a sole trader, like operational simplicity, with the critical protection that limited liability offers.