Unit 3 - Legal structures

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  • Created by: sade
  • Created on: 29-12-13 16:19
Definition of a sole trader
A business owned and operated by a single person
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Advantages of being a sole trader
Control, profit, local (personal relationship), privacy, flexibility
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Disadvantages of being a sole trader
Decisions, (lack of) capital, load of work, full liability, reverse economic of scale
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Definition of a partnership
A group between 2 and 20 people contribute capital and expertise into the business
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Advantages of partnership
More captial, flexibility, shared responsiblity, decison making, more knowledge
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Disadvantages of a partnership
disagreements, full liability, (lack of) freedom, taxation (40%), profit sharing
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Why can you only have 2-20 parnters
Companies act 1985
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Definition of a company
incorporated business with seperate legal idenitity to it's shareholders
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advanages of a company
limited liability, separate entity, taxation (21%), shareholders controls
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disadvantages of a limited company
paperwork, public data, yearly accounting
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definition of shareholders
part owners of a company
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definition of limited liability
protection for owners, they only risk the money they have invested
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history of limited liability
regarded as a privilege in 1855, limited liability act.
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Why should you draw up a deed of partnership
cover arrangement for: sharing of profits, liabilities, continuation after death, resignment, responsibility
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Other cards in this set

Card 2

Front

Control, profit, local (personal relationship), privacy, flexibility

Back

Advantages of being a sole trader

Card 3

Front

Decisions, (lack of) capital, load of work, full liability, reverse economic of scale

Back

Preview of the back of card 3

Card 4

Front

A group between 2 and 20 people contribute capital and expertise into the business

Back

Preview of the back of card 4

Card 5

Front

More captial, flexibility, shared responsiblity, decison making, more knowledge

Back

Preview of the back of card 5
View more cards

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