business forms Flashcards

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1
Q

what is a sole trader

A

owned by one person

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2
Q

what are the pros of being a sole trader?

A
  • can be set up with no formalities
  • cheap and simple to run
  • private
  • independent
  • proprietor keeps all profits
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3
Q

what are the cons of being a sole trader?

A
  • difficult to raise finance
  • unlimited liability - owner liable for all debts
  • risk to personal finances
  • personal responsibility
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4
Q

what is a partnership according to the Partnership Act 1980 s1?

A

the relationship which subsists between persons carrying on a business in common with a view of profit

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5
Q

where may the rights and liabilities of the partners be set out?

A

in a formal deed of partnership or a written partnership agreement

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6
Q

what does the Partnership Act 1980 make provisions for?

A

contribution to capital, division of profits, rights of partners to participate in management etc but all may be varied by agreement

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7
Q

what are the pros of a partnership?

A
  • easy to set up and run
  • flexible
  • share decision making
  • bring in different skills and experience
  • private
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8
Q

what are the cons of a partnership?

A
  • no separate legal existence
  • unlimited liability
  • changes can dissolve partnership
  • problems if there are disagreements
  • financing
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9
Q

what is a limited liability partnership (LLP - Limited Liability Partnerships Act 2000 s2(1)

A

an LLP may be incorporated when two or more persons associated for the purpose of carrying on a lawful business subscribe their names to an incorporation document

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10
Q

what is the LLP status intended for?

A

professional partnerships such as law or accountancy firms

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11
Q

what do members of LLP benefit from?

A

limited liability

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12
Q

what are the most common types of company?

A

private limited companies (Ltd) and public limited companies (plc)

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13
Q

which act contains information about companies?

A

Companies Act 2006

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14
Q

after incorporation of a company, what are separated?

A

ownership and control

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15
Q

what does a company have and what is the liability of its shareholders

A

A company has a separate legal personality and the liability of its shareholders is limitedh

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16
Q

how do you set up a limited liability company?

A
  • register with companies house
  • company information is added to the Register of Companies
  • information on the register can be searched by anyone
17
Q

what are the pros of a limited liability company?

A
  • separate legal personality
  • limited liability
  • options for investment
  • credibility
18
Q

what are the cons of a limited liability company?

A
  • regulatory compliance
  • separation of ownership and control
  • publicity of accounts and documents
19
Q

what is a private limited company (ltd)?

A

CA 2006 s4(1) - company that is not a public company
- can have one member
- must have LTD or the word limited in its name
- no minimum capital requirement
- cannot offer shares to public

20
Q

what is a public limited company (plc)?

A

CA 2006 s4(2) - a company … the memorandum of which states that it is to be a public company and the requirements of the act .. as to registration … as a public company have been complied with

21
Q

what must a plc have?

A
  • at least 2 members
  • the words public limited company or plc at the end of its name
  • a minimum share capital of £50,000 before it can start trading
22
Q

what can a plc do?

A

may offer its shares for sale to the general public
may decide to float its shares on the stock market

23
Q

what documentation is needed to set up a limited company?

A

memorandum of association
articles of association