Unit 3 - Legal structures 3.0 / 5 based on 1 rating ? Applied BusinessLegal structures ASAQA Created by: sadeCreated on: 29-12-13 16:19 Definition of a sole trader A business owned and operated by a single person 1 of 14 Advantages of being a sole trader Control, profit, local (personal relationship), privacy, flexibility 2 of 14 Disadvantages of being a sole trader Decisions, (lack of) capital, load of work, full liability, reverse economic of scale 3 of 14 Definition of a partnership A group between 2 and 20 people contribute capital and expertise into the business 4 of 14 Advantages of partnership More captial, flexibility, shared responsiblity, decison making, more knowledge 5 of 14 Disadvantages of a partnership disagreements, full liability, (lack of) freedom, taxation (40%), profit sharing 6 of 14 Why can you only have 2-20 parnters Companies act 1985 7 of 14 Definition of a company incorporated business with seperate legal idenitity to it's shareholders 8 of 14 advanages of a company limited liability, separate entity, taxation (21%), shareholders controls 9 of 14 disadvantages of a limited company paperwork, public data, yearly accounting 10 of 14 definition of shareholders part owners of a company 11 of 14 definition of limited liability protection for owners, they only risk the money they have invested 12 of 14 history of limited liability regarded as a privilege in 1855, limited liability act. 13 of 14 Why should you draw up a deed of partnership cover arrangement for: sharing of profits, liabilities, continuation after death, resignment, responsibility 14 of 14
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