1.5.4 - Forms of business - sole traders Flashcards
1
Q
Sole trader
A
A business organisation which has a single owner
2
Q
Sole trader is the simplest form of a business organisation T/F
A
True
3
Q
Can employ people but they will not be involved in the control of the business
A
True
4
Q
What type of sector would you usually find a sole trader
A
Tertiary Sector
5
Q
Tertiary Sector
A
The production of services in the economy e.g hairdressing, garden maintenance, tutoring
6
Q
All sole traders have what type of liability
A
Unlimited Liability
7
Q
Unlimited Liability
A
Legal status which means that business owners are liable for all business debts
Business debts can be paid through the seizure of sale of owners personal debts
8
Q
Advantages of Sole traders - 4
A
- Owner keeps 100% of profits - e.g no dividing profits with partners, no paying dividends to shareholders
- 100% control - get to decide direction & make key business decisions yourself
- Simple to set up , no legal regulations,documents,registrations e,g companies house
- Only pay income tax and corporation tax (taking the biz)
9
Q
Disadvantages of sole traders - 4
A
- Unlimited liability
- may struggle to raise finance as lenders may consider too risky too invest
- maybe difficult to exploit economies e.g bulk buying
- nobody to cover absence/ illness - productivity may stop meaning business stops earning
