UNIT 1 - Business in the real world - Unit 1.2 - Business ownership
- Created by: daytime.dreams
- Created on: 13-03-19 17:09
Unit 1.2 - Business ownership
1.2.6 - Sole Traders
Sole Trader
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A sole trader is a form of business that is owned and managed by one person.
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You don’t need to register with the government or fill out forms.
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Owned and managed by the same person but may have staff.
Advantages
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Quick and easy to set up.
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Make all the decisions yourself, quickly.
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You are your own boss.
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Keep all the profits.
Disadvantages
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Stressful - All decisions = A lot of pressure
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Only good at some parts e.g. Finance not marketing
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Unlimited Liability - Lose everything you own
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A lot of work, no one to help, hard for holidays, sick?
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Death = end of business.
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Difficult to raise money - Many new businesses fail, banks won’t lend. Have to borrow from family.
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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
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A partnership occurs when two or more people join together in a business enterprise to pursue profit.
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Usually between 2 and 20 people.
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Some exceptions are: Solicitors, accountants, auctioneers and estate agents.
Deed of partnership
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A legal document which sets out the rules and agreements of the partnership. Includes:
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How to divide the profit,
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How decisions are made,
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How to value the business if someone leaves,
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How others can join,
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The purpose is to avoid disputes. Without a deed, all profits are shared equally, regardless of how much was invested.
Advantages
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Several people means more…
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