unincorporated business structures

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  • unincorporated businesses
    • do not have limited liability risk losing their personal belongings if fail to pay back debts
    • unincorporated means that the individual and the business have the same identity there is no distinction between the two
    • usually smaller companies
    • 1) sole trader
      • one person running the business means no sharing of profits
      • more control over the business yourself
      • cheaper to run than a limited company as you don't need a separate accounts system you don't have to pay corporation tax
      • unlimited liability if you run into debt your personal belongings are at risk
        • personally liable for all debts
    • 2) partnership
      • two or more people means more brains meaning more ideas
      • profits have to be shared
      • unlimited liability  if you run into debt your personal belongings are at risk
      • less paperwork
      • trusting your partner can be an issue, the actions of one partner can affect another
        • the owenrs are responsible for debts so one partner could overspend be unable to pay back the money and cause all the other partners to become in debt personally.
  • its safer for a sole trader or partnership to change their legal structure to a limited company if they wish to borrow money or expand


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