UNIT 1 - Business in the real world - Unit 1.2 - Business ownership

?

Unit 1.2 - Business ownership

1.2.6 - Sole Traders

Sole Trader

  • A sole trader is a form of business that is owned and managed by one person.

  • You don’t need to register with the government or fill out forms.

  • Owned and managed by the same person but may have staff.

Advantages

  • Quick and easy to set up.

  • Make all the decisions yourself, quickly.

  • You are your own boss.

  • Keep all the profits.

Disadvantages

  • Stressful - All decisions = A lot of pressure

  • Only good at some parts e.g. Finance not marketing

  • Unlimited Liability - Lose everything you own

  • A lot of work, no one to help, hard for holidays, sick?

  • Death = end of business.

  • Difficult to raise money - Many new businesses fail, banks won’t lend. Have to borrow from family.

  • No market power the - Hard to negotiate deals, higher costs - fewer profits

Unlimited Liability

Means that the personal possessions of the owners of the business are at risk if there are any problems.

1.2.7 - Partnerships

Partnership

  • A partnership occurs when two or more people join together in a business enterprise to pursue profit.

  • Usually between 2 and 20 people.

  • Some exceptions are: Solicitors, accountants, auctioneers and estate agents.

Deed of partnership

  • A legal document which sets out the rules and agreements of the partnership. Includes:

  • How to divide the profit,

  • How decisions are made,

  • How to value the business if someone leaves,

  • How others can join,

  • The purpose is to avoid disputes. Without a deed, all profits are shared equally, regardless of how much was invested.

Advantages

  • Several people means more

Comments

No comments have yet been made