characteristics of the main types of small business ownership

Question 1

3 Types of small business ownerships?

Answer 1

Solo Trader, Partnership, Small Proprietary Company

Question 2

Number of Owners?

Answer 2

Solo Trader - 1
Partnership - 2-20(some cases like accounting firm can be upto 1000)
Small Propiertary - 1 - 50

Question 3

Liability of Solo Trader?

Answer 3

Owner has unlimited liability. It means if business goes bankrupt personal assets of owner will be used to cover any outstanding debt

Question 4

Solo Trader ability to raise capital?

Answer 4

Owner responsible to otain all funds for business and example could get loan from bank.

Question 5

Distribution of Profits?

Answer 5

Solo Trader - All too owner
Partnership - Profits shared
Small Company - Director decides

Question 6

Transfer of ownership?

Answer 6

Solo Trader - difficult
Partnership - difficult
Small Company - Relatively simple

Question 6

Seperate Accounting Entity

Answer 6

Solo Trader - yes
Partnership - yes
Small Company - yes

Question 6

Seperate Legal Entity

Answer 6

Solo Trader - no
Partnership - no
Small Company - yes

Question 7

Continiuty of existence

Answer 7

Solo Trader - Simple to wind up and cost free
Partnership - If partner leaves it does not stop them from being liable for debts bofre thety left. If new partner joins they aint liable for dets before they joined.
Small Company - not dependent on any of the owners

Question 7

DisAdvantages of Solo Trader

Answer 7

Finacial resoruces are limited

Owner bears unlimited liabilty

If owner becomes ill/absent no 1 avaiable to replace him

Question 8

Advantages of Solo Trader

Answer 8

owner makes all decision, owner is boss

Owner keeps all profit

High flexibbilty of owner

Least expensive to set up

Easy to wind up

Question 9

Advantages of Partnership?

Answer 9

Easier to raise capital as more partners

Less expensive to form partnership than company

Easy to dissolve partnership

Question 10

Disadvantages of Partnership?

Answer 10

Unlimited liability so if become bankrupt private assets used to settle debt.

Diffuclty to change onwership of businees

High chance of disagreements

Profits shared

Question 11

Advantagees of Small Properitary Company?

Answer 11

Easy to raise capital

Limited liability

Transfer of ownership is simple

Question 12

DisAdvantagees of Small Properitary Company?

Answer 12

running costs can be high

difficult to dissolve

more complicated to form than a partnership.

Question 13

3 Requirments for Small Propeeirtary Compnay

Answer 13

assets less than 12.5mil

fewer than 50 emplyees

consolidate revenue of less than 25 million