Advantages And Disadvantages

Question 1

Sole trader- advantages

Answer 1

Easy to set up
No legal formalities
No personality clash as only one person
Does not share profits

Question 2

Sole trader- drawbacks

Answer 2

May need to sell personal belongings to make up cash if bust
Remains small organisation
Deals with all losses n difficulties themselves
Only one persons skills

Question 3

Partnership advantages

Answer 3

Management is shared 
Skills shared 
Business decisions shared 
Business risks shared 
Losses shared

Question 4

Partnership disadvantages

Answer 4

Responsible for each other’s actions
Partners face unlimited liability-bear all consequences of legal action -may need to sell belongings to make up money
Profits are shared

Question 5

Limited company-advantages

Answer 5

Limited personal liability-won’t he pursued for further contributions once shares are paid for
Shareholders to appoint managers as directors
Shares sold and bought so transfer ownership is easy n straightforward

Question 6

Limited liability- disadvantages

Answer 6

Strict legal requirements-may need professional help

Regular filing at companies house is a legal requirement