Different types of business Flashcards
Sole trader
Incorporated business
What is it? - What does it mean for owners
Separate entity from its Owners. Owners generally not liable for business debts
What is the most common form of incorporated business
Limited Company
What is an unincorporated business?
Company that is run by individuals and the owners have full personal liability for the debts of the business. For example: Sole traderts, partnerships and limited partnerships.
Sole trader what are they and what are they sometimes referred as?
Runs and unincorporated business on their own as a self employed person. Sometimes referred to as sole practitioners.
What happens to he sole trade if they cannot pay their debts
Their business and personal assets are all treated the same for legal purposes. Debt will be paid from the sole trade personal bank account and other personal assets. Which could result in bankruptcy.
Is there a limit to a sole trader’s liability?
No the sole trader has unlimited liability.
Is there legislation that applies specifically to sole traders?
No but general business legislation will apply to the sole trader. Such as tax, or Sales of goods act.
