Introduction - Legal Forms of Business Flashcards
(21 cards)
What legal business models are commonly used in the UK?
- Sole Trader
- Partnership
- Limited Liability Partnership
- Private and unlisted public companies
What are the costs involved in setting up as a sole trader?
None - ST can start trading immediately without any formalities or registration
Does ST have personal liability for debts?
Yes - they have unlimited personal liability. Personal assets can be used to cover business debts
Does a sole trader have separate legal personality?
No, contracts are made in the individual’s own name
Are there any formal filing requirements for sole traders?
No - they do not file with CH and have no procedural obligations
Is a sole trader’s business information private?
Yes - there is complete privacy; no public accounts or records are required.
How can sole traders raise capital?
Primarily vis personal funds or personal loans
How is a general partnership formed?
Informally - there are no required formalities. It can be formed by simply working together with view to profit
What is the liability of partners in a general partnership?
Partners have unlimited liability:
- Contract: joint liability
- Tort: joint and several liability
Is a partnership a separate legal entitity?
No
Are partnerships required to register or file documents?
No
How is finance raised in a partnership?
Through individual partner contributions or personal loans taken by partners
What are costs of forming an LLP?
Legal and incorporation costs are involved
What liability do LLP members have?
Members have limited liability for the LLPs debts, limited to their agreed contributions
Does LLP have legal personality?
Yes - it is a separate legal entity that can own property, contract, and sue or be sued
What formalities apply to LLPs?
Must register at CH and submit annual accounts and other filings
How can LLPs raise finance?
- Borrow in its own name
- Can issue floating charges
- cannot issue shares
What liability do shareholders have in a company?
Limited liability to the amount unpaid on their shares (if any)
Is a company a separate legal entity?
Yes - the company is legally distinct from its shareholders and directors
What formalities apply to companies?
- Must be registered at CH
- Must file annual accounts and meet various legal disclosures
How can companies raise finance?
- Borrowing
- Issuing shares
- Granting wide range of security interests (eg. fixed/floating charges)
