Business media overview

Question 1

What is the legal status of a sole trader?

Answer 1

1. The sole trader and the business are one and the same entity, and
   therefore the business has no legal status or identity of its own
2. When a contract is entered into, the sole trader will enter into it in his
   personal capacity and have unlimited personal liability under it.

Question 2

What is the relevant legislation for sole trader?

Answer 2

Unlike partnerships or companies, there is no specific legislation
regulating sole traders. They are subject merely to relevant
commercial and tax legislation, accounting rules and the common law.

Question 3

What liability does sole trader have to third parties?

Answer 3

Unlimited personal liability

All of your assets can be seized and sold in order to satisfy the debts and liabilities

Question 4

How do you form a sole proprietorship?

Answer 4

Register with the HMRC as self-employed.

Question 5

What is the tax requirements for sole proprietorship?

Answer 5

Sole proprietors are required to complete their own tax returns - need to ensure you keep clear and accurate records of all sales and purchases, so that the process of self-assessment can be completed quickly and easily.

Question 6

How does sole proprietorship finance their business?

Answer 6

1. Invest her own money and risk losing it
2. Persuade others to invest (where they may demand a share of the profits
3. Obtain a loan - Given that many sole proprietorships are small affairs, banks are cautious when lending to them.

Question 7

How do you create a partnership?

Answer 7

Simply by two people agreeing to enter into business as partners. This agreement may be written, oral, or implied through conduct.

Question 8

How to avoid dispute when forming a partnership?

Answer 8

There should be a partnership agreement in writing, executed by deed and contain written terms stating how the partnership is to be run.

Question 9

How do you determine if there is a partnership?

Answer 9

Facts.

There does not have to be any intention on the part of the parties to be, or form, a partnership.

Whether a partnership actually exists will be determined on the facts.

Question 10

What is the relevant legislation for partnership?

Answer 10

s.1 Partnership Act 1890

Question 11

What are the disadvantages of a partnership?

Answer 11

1. Unable to own property or enter into contracts
2. If the partnership becomes insolvent, the creditors are entitled to satisfy those debts by enforcement against the personal assets of each of the partners themselves.
3. The default provisions (implied by that legislation), are often unsuited to the modern business environment.

Question 12

Who can be liable in a partnership?

Answer 12

One partner can be vicariously liable for the wrongful acts or omissions of the other.

The partners are jointly liable for the debts and obligations of the firm

Question 13

When would a client ask for legal advice on a partnership structure?

Answer 13

1. Asking for help to avoid creating a partnership - because the law governing partnerships is over 100 years old.
2. Concerns about being subject to unlimited liability.

Question 14

When was the private fund limited partnership introduced and what does it provide?

Answer 14

6 April 2017

There is a list of permitted activities in which the limited partners can be involved without being deemed to be involved in management.

Question 15

What are the relevant legislations for limited partnerships?

Answer 15

1. The Limited Partnerships Act 1907

2. Common law

Question 16

What is the remit of a limited partner?

Answer 16

Not involved in the day-to-day management of the partnership.

They are passive investors with no active role in managing the partnership business.

Question 17

When is limited partnership employed?

Answer 17

Establishing private equity and venture capital funds.