Chapter 1 -

Question 1

What are the two main type of business medium ?

Answer 1

Limited liability concept
Unlimited liability concept

Question 2

Which are the two unincorporated businesses ?

Answer 2

Sole traders
Partnerships

Question 3

Which are the incorporated businesses ?

Answer 3

Limited companies (private and public )
Limited liability partnerships

Question 4

Does the incorporated business has its own legal entity ?

Answer 4

Yes

Question 5

Does The the incorporated business have its own legal entity ?

Answer 5

No

Question 6

Incorporated business does it need to be registered either companies house ?

Answer 6

Yes

Question 7

Is there a distinction in the unincorporated business between the business and its owners ?

Answer 7

No

Question 8

Can legal action be taken against incorporated business Ltd ?

Answer 8

Yes

Question 9

What is a sole trader ?

Answer 9

Someone who is self employed and owns and runs their own unincorporated business

Question 10

Can the sole traders have employees?

Answer 10

Yes but they are the sole owner of their business

Question 11

Can sole traders be involved in trade business or profession ?

Answer 11

Yes

Question 12

What are the advantages of a sole trader ?

Answer 12

It keeps management and ownership simple
Need to register either VAT and HMRC
No costs of forming a company
Separation of ownership

Question 13

What are the disadvantages of sole traders ?

Answer 13

Have unlimited liability ( they are responsible for everything)

Question 14

Another bad disadvantage of sole traders?

Answer 14

They can go bankrupt

Question 15

On what type of tax do sole traders pay trading profits ?

Answer 15

They pay income tax

Question 16

On What type of tax do sole traders pay capital gains?

Answer 16

On capital gains tax

Question 17

What other tax advice do sole traders get ?

Answer 17

They get advice On deciding on business medium

Question 18

What happens if you have modest funds ? Is it advisable to invest in a business ?

Answer 18

No, it is advisable to operate as a sole trader

Question 19

Do sole traders need to register with HMRC ?

Answer 19

Yes

Question 20

How many types can be the incorporated business ?

Answer 20

Two: can be public or private

Question 21

By what can incorporated business be limited by ?

Answer 21

They can be limited by shares or guarantee

Question 22

What makes the incorporated business different from the unincorporated ?

Answer 22

The creation of a legal process and documents

Question 23

Do you need to fill in at the companies house for incorporated business ?

Answer 23

Yes

Question 24

What can the incorporated business be involved with ?

Answer 24

Can be involved in any trade, business, profession

Question 25

In what case it became legal for a company to become a separate legal entity?

Answer 25

In the Salmon vs Salomon Co Ltd 1897

Question 26

In what case did the court disregard this principle of the consimt being a separate legal entity ?

Answer 26

Prest vs Petrodel Resorces limited and others 2013

Question 27

What can this separate legal entity do ?

Answer 27

Can enter into contracts It can own property Be a party to legal proceedings (can be sued) It can have perpetual succession ( can continue indefinitely)

Question 28

What means perpetual succession ?

Answer 28

Can continue indefinitely

Question 29

How else are members called ?

Answer 29

Shareholders

Question 30

Who are the shareholders, what do they do ?

Answer 30

They wrestle members of the company who own shares in the company

Question 31

Who have the powered in the incorporated business on a daily basis ?

Answer 31

Directors - they run the company

Question 32

What are the advantages of incorporated business ?

Answer 32

1.Separation of ownership and management 2. The sake/transfer of a company interest is straightforward done via transfer of share as an alternative to the transfer of the assets 3. Limited liability

Question 33

What means limited liability ?

Answer 33

It means limited by shares and by guarantee

Question 34

What is guarantee ?

Answer 34

Non profit entities

Question 35

What means limited by shares ?

Answer 35

The liability (responsibility) of shareholders is limited to any amount unpaid in their shares

Question 36

What means limited by guarantee ?

Answer 36

The liability (responsibility) of shareholders is limited to any amount they promise to pay in the event that the company is wound up ( finishes)

Question 37

How do you get out of a company that is finished (wound up )?

Answer 37

You pay for your shares and then you no longer have any liability

Question 38

What if the shareholders pays partly for the its shares when the company is finished ? Are you still liable ?

Answer 38

Yes, if the payment has not been made, or made partially, then you’ll be liable for the balance

Question 39

Is the incorporated business recognised internationally?

Answer 39

Yes

Question 40

What can the incorporated business grant ?

Answer 40

Can grant floating charges and fixed charges

Question 41

Can expenses be expensed on the business in the incorporated business ?

Answer 41

Yes

Question 42

Does incorporated business gets tax advice ?

Answer 42

Yes, when deciding a medium

Question 43

What are the two big advantages of incorporated business ?

Answer 43

It’s a separate legal entity and has limited liability

Question 44

What are the 5 disadvantages of incorporated business ?

Answer 44

1.Involves ongoing formalities for decision making, and filing disclosure requirements 2. Has legal expenses 3. It’s an administrative burden 4. Info kept at companies house becomes public 5.pay corporation tax on both income profits and capital gains