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Business law > Business mediums > Flashcards

Business mediums Flashcards

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1
Q

Sole trader - Separate Legal personality/Ownership of assets

A

Unincorporated, so there is no separate legal personality, the sole trader owns the assets personally.

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2
Q

Sole trader - Risk

A

Solely the trader’s risk. Employees take no liability for debts.

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3
Q

Sole trader - Sharing profits

A

Solely the trader’s profits. Employees earn a wage not a share of profits

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4
Q

Sole trader - Decision-making

A

Solely the trader’s decisions

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5
Q

Sole trader - Administrative burden

A

Do not have to publish accounts or file documentation with Companies house therefore there’s secrecy.

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6
Q

Sole trader - Flexibility of structure

A

There is not set structure although a management structure may be set up by the trader

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7
Q

Partnership - Separate legal personality/Ownership of assets

A

Unincorporated so no separate legal personality. Partners own the assets not the partnership. Joint liability for partners which is unlimited

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8
Q

Partnership - risk

A

Joint and several liability meaning all and any partner can be sued for the totality of liabilities

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9
Q

Partnership - Sharing profits

A

Shared equally unless agreed otherwise. Usual to agree that it is linked to size of investment. Therefore advisable to have a partnership agreement

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10
Q

Partnership - decision making

A

Equal votes in decision making unless agreed otherwise

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11
Q

Partnership - Administrative burden

A

Very little as for sole trader

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12
Q

Partnership - Flexibility of structure

A

The partnership act imposes a structure only if there is no agreement to the contrary. Advisable to have a partnership agreement which can create any structure the partners want

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13
Q

Limited Liability Partnership - Separate legal personality/Ownership of assets

A

Yes LLP owns assets. Unincorporated

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14
Q

Limited liability partnership - Risk

A

Limited liability of members.

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15
Q

Limited liability partnership - Sharing profits

A

As for partnership therefore advisable to have a members agreement

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16
Q

Limited liability partnership - Decision making

A

As for partnership

17
Q

Limited liability partnership - Administrative burden

A

Greater than for partnership as there is registration and on-going filing requirements

18
Q

Limited liability partnership - Flexibility of structure

A

As per partnership

19
Q

Limited liability partnership - Transparency/Administrative burden

A

Accounts and details of members need to be filed and go on a public register at companies house - no secrecy

20
Q

Company - Separate legal personality/Ownership of assets

A

Yes, company owns asserts in its own rights

21
Q

Company - risk

A

Limited liability of shareholders, directors protected by concept of separate legal personality.

22
Q

Company - sharing of profits

A

Shared amongst the shareholders in proportion to the number of shares they own.

23
Q

Company - decision making

A

Separation of power. Day to day decisions are taken by directors who have 1 vote each. Major decisions usually taken by shareholders where voting is proportionate to number of shares

24
Q

Company - administrative burden

A

Highest burden. Highly regulated leading to registration and on-going filing requirements

25
Q

Company - flexibility of structure

A

Reasonably rigid. Regulated by statute and articles of association

26
Q

Company - Transparency/administrative burden

A

High level of transparency due to filing requirements.

27
Q

Limited liability - definition

A

Shareholder’s are only liable up to the amount of their investment

28
Q

Unlimited liability - Definition

A

Full personal liability for debts of the business

29
Q

Separate legal personality - Definition

A

A company is considered a legal person separate from its owners and directors. The company becomes a legal person that has rights and obligations, for example it can own property and assets, sue and be sued in its own right. A company is liable for its own debts; creditors cannot sue members or directors to pay off debts, or seize their personal assets.

30
Q

What influences a client’s choice of business medium

A

Risk, cost and transparency

Business law (6 decks)

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