types of business ownerships Flashcards
memorise and understand
sole trader
a person who runs and owns a business as an individual
profit - sole trader
all profit and losses belong to the sole trader
tax - sole trader
profit is treated as the personal income of a sole trader and must be included in the owners personal income tax return - following tax brackets
liability - sole trader
liable for any debts or damage caused by business
unlimited liability:
owners personal items can be sold to pay for business debts and damage
limited liability
owners person items can not be sold to pay for debts and damages towards the business
advantages of a sole trader
- quick cheap and easy to set up
- owner has complete decision making control
- owner can choose their work hours
- owner receives all profit
disadvantages of sole trader
limited lifespan
limited access to money
unlimited liability
owner may have to work long hours and not take holidays and no one else can continue their work
seperate legal entity
when you or anyone else in the company are seperate from your business for legal purposes
not a seperate legal entity
when you or anyone else in the company are not seperate from the business
partnership
two or more (up to 20 people) who operate and business to make profit
general partnership
partners are equally responsible for the management of the business and each has ‘unlimited liability’ for partnership debts
limited partnership
one or more partners have ‘unlimited liability’ and one or more partners have ‘limited liability’
profits of partnership
split equally between partners (general partnership) or is laid down in a ‘partnership agreement’ if one is written
tax - partnership
owners are liable for any taxes.