Characteristics

Question 1

Sole trader

Answer 1

Financial problems lies with only them
Fairly small- grows will need to replaced by partnership or limited company
Liable for more losses than profits made
May need to sell personal belongings to pay losses=personal bankruptcy in some cases
Informal and easy to set up

Question 2

Partnership

Answer 2

Partners are likely to be able to command more resources to put into business
May need to sell belongings to come up with money if in bankruptcy
Each partner is liable under the law for the actions of their partner
Not difficult to set up
Partner drawn up by solicitor- resolve future disputes

Question 3

Limited companies

Answer 3

Shareholders are liable only for the amount which they have paid into company in exchange for shares
More complexed to set up
On reg basis, company’s are responsible for making available certain amounts of financial info about activities to public- companies house
Any member of public can assess this through website
In small companies- directors & shareholders are same people
Larger companies- more likely are diff people