Business models and incorporation

Question 1

Name the advantages of sole trader (3)

Answer 1

1. no set up costs/trade right away
2. no CH filings
3. complete privacy

Question 2

Name the advantages of traditional partnership (4)

Answer 2

1. no set up costs/trade right away
2. no CH filings
3. complete privacy
4. tax transparent

Question 3

What is a partnership?

Answer 3

Two or more persons with view of making profit

Question 4

Name 2 key provisions in the PA 1980

Answer 4

1. profits and losses shared equally
2. no salary

Question 5

Name the key disadvantage of sole trader and traditional partnerships

Answer 5

No separate legal personality. Therefore, personally liable

Question 6

Name 3 advantages of LLP

Answer 6

1. no set up costs
2. separate legal entity/limited liability
3. tax transparent

Question 7

Name the disadvantage of LLP

Answer 7

Required to file annual accounts on CH

Question 8

What is the key advantage of a company?

Answer 8

Can issue shares = raise equity quicker

Question 9

What is the key disadvantage of a company?

Answer 9

Formal requirements under CA 2006

Question 10

What 4 things are needed to incorporate a company from scratch?

Answer 10

1. Articles
2. Memo
3. Fee
4. Application form - INO1

Question 11

What 3 main details does a certificate of incorporation show?

Answer 11

1. name
2. number
3. date

Question 12

What are the 4 key changes needed for a shelf company? What resolutions are needed for each?

Answer 12

1. Name - special
2. Articles - special
3. office - ordinary
4. members - ordinary

Question 13

When does the client officially become a shareholder?

Answer 13

Once entered into the register of members

Question 14

What does limited liability mean for an LLP?

Answer 14

LLP members are liable only up to the amount of their capital

Question 15

What is an LLP?

Answer 15

an incorporated partnership