Conducting A Business

Question 1

What are the three main business structures?

Answer 1

Sole trader
Partnership
Company

Question 2

What are 3 advantages of a sole trader?

Answer 2

The owner is independent and has full control
Cheap to set up
The owner keeps all profits

Question 3

What are 3 dis-advantages of a sole trader?

Answer 3

Unlimited liability the owner is not separate from the business entity
Limited access to funds (owners equity)
Owner does not benefit from workers comp

Question 4

What are 3 advantages of a partnership?

Answer 4

Reasonably cheap and easy to establish
Privacy - no public financial records
Each person has equal responsibility to run the business

Question 5

What are 3 dis-advantages of a partnership?

Answer 5

Difficulties in resolving disputes / decision making
Lack of permanency if partnership disbands/dissolves due to death, bankruptcy etc
Limit on number of participants

Question 6

What are 3 advantages of a company?

Answer 6

Separate legal entity
Easier access to finance
Tax rate usually less then for individuals

Question 7

What are 3 dis-advantages of a company?

Answer 7

Cost more to establish
Strict reporting and accounting requirements
Loss of control - shareholders take most of the control from owner

Question 8

What are the requirements for registering a business?

Answer 8

Registering the business name with ASIC