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Business law > Business mediums > Flashcards

Business mediums Flashcards

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. LLP is a separate legal entity

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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. It can own property and assets, sue and be sued in its own right and enter into contracts. Creditors cannot sue members or directors to pay off debts.

30
Q

What influences a client’s choice of business medium

A

Risk, cost and transparency

31
Q

Limited partnership

A

Provides partners with limited liability but a limited partner cannot participate in the management of the limited partnership. Whereas with limited liability you get limited liability and management control

32
Q

Do you have to submit the partnership agreement on incorporation of an LLP

A

No

Business law (6 decks)

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