- Decision making faster, sole trader only person responsible
- Feeling of independence + control
- Straightforward to set up. Few legal requirements
- Profits made all belong to sole trader - can be Drawings
- Owner has unlimited liability for debts of business. If it becomes bankrupt, owner's personal assets may be sold to pay trade payables.
- Expansion limited - can only be achieved by owner ploughing back profits, or borrowing from lender e.g. bank
- Owner usually has to work long hours and may be difficlt to take holidays. If owner should become ill, business could become slow or stop altogether.
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- Partners may be able to specialise in particular areas
- Cheap and easy to set up
- Possibility of increased capital
- With more people running business, more cover for illness and holidays
- Decisions may take longer - other partners may need to be consulted
- May be disagreements between partners
- Each partner liable in law for dealings and business debts of whole firm (unless is a Limited Liability Partnership (LLP) set up under the Limited Liability Partnerships Act 2000)
- Retirement or death of one partner may adversely affect the running of the business.
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- Shareholders have protection of 'Limited Liability' - if company failed, shareholders would only lose initial investment (or any promised investment). Unlike sole trader or partnership, cannot lose private posessions.
- Limited Companies can raise larger amounts of money (capital). Unlike Sole traders (1 person) or partnerships (up to 20 people), companies have unlimited amount of shareholders raise funds from
- Limited company - seperate legal identity owners, can continue to operate irrespective of changes in ownership.
- Limited Companies subject to many legal requirements:
- Memorandum of association - details external dealings with the company
- Articles of association - details internal regulation of the company
- Both filed at Companies House - Cardiff - Registrar
- Directors required to send the annual accounts to registrar for public inspection
- Possibility that over a period of time ownership of business can change. therefore control can change - can be bad for the original owners
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