A person who sets up their own business. They are the only owner and have unlimited liability.
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Why become a sole trader?
The ower had independence, they can run the business without including others. It is a small business so an employee is able to give a personal service.
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What accounts do sole traders need to produce?
Income statement- to show profit/loss. Asset sheet to show liabilities and assets.
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What are the advantages of being a sole trader?
Small and easy to set up, easy legal structure, complete contol of assets, be your own boss- hands on approach.
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What are the disadvantages of being a sole trader?
Long working hours, difficult to take time off for holidays and illness, inlimited liabilities, success or failure of business rests on owner.
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What is a partnership?
The relation which exists between persons carrying on a business in common with a veiw of profit.
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What are the advantages of a partnership?
Cheap and easy to set up, possibly increased capital over sole trader, individual partners may be able to contribute differnt skills, more cover for holidays and illness.
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What are the disadvantages of partnerships?
Decisions cantake longer to make, ther may be disagreements, Each partner is liable for the debts and dealings of the business, loss on partner may affect the business.
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How to set up a private limited company?
You need to choose a board of directors and reister this with company's house.
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How to register with companies house?
There are two main ways, the cost of a paper form is £40, you can also apply online on a peice of software costing £13.
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How o yu run a private limited company?
At the end of the year accounts must be produced for companies house and for the public. Can't sell shares publicly, can sell to people within the business after it has been cleared. Directors are employed by the company to run it entering contracts.
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What protection do LTDs have?
There is limited liability for private limited companies, it is usually limited to the shareholders, the liability also depands on the type of business.
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What are the advantages of a LTD?
Limited liability, business not affected by the status of the owner, minimum number of shareholders needed to start the business is two.
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What are the disadvantages of a LTD?
Growth may be limited because maximum shareholders allowed is 50, Shares can't be sold without permission of other shareholders.
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How to take more contol of the business?
It is easy to lose control as someone can buy the majority sharesand take over the company. More shares= more power.
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What is a public limited company?
A business that has limited liabilty, so if the business failed the owner wouldn't lose any personal assets.
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When can a business become a PLC?
Shared capital of over £50000, atleast two shareholders and two directors.
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What can a PLC do in terms of shares and the stock market?
They may raise capital from th public on the stock market. They do not have to issue shares on the stock market.
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Other cards in this set
Card 2
Front
Why become a sole trader?
Back
The ower had independence, they can run the business without including others. It is a small business so an employee is able to give a personal service.
Card 3
Front
What accounts do sole traders need to produce?
Back
Card 4
Front
What are the advantages of being a sole trader?
Back
Card 5
Front
What are the disadvantages of being a sole trader?
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