Business Structures Flashcards
1
Q
What is 2 advantages of a Sole trader
A
- Easy to run and to start
- No registration or formal documentation is required
2
Q
What is 2 advantages of a partnership
A
- Expertise is shared
- Can be an effective way to share business operation costs (e.g several professional people operate out of a joint office)
3
Q
What is 2 advantages of a company
A
- More credibility in the market place
- Easier to attract funds and investments
4
Q
What is 2 disadvantages of a sole trader?
A
- Owners have unlimited liability for all business taxes and debts, putting their personal assets at risk
- Sole traders can lack credibility in the marketplace
5
Q
What is 2 disadvantages of a Partnership
A
- Partners may be liable for debts incurred by other partners
- Putting personal assets at risk
6
Q
What is 2 disadvantages of a Company
A
- Control is divided or shared
- Directors need to clearly understand their responsibilities
7
Q
What is unlimited liability
A
If the business fails the personal assets of the owner can be used to repay business debts
8
Q
What is limited liability
A
If the business fails the personal assets of the owner cannot be used to repay business debts
