Forms Of Ownership [3] *G10 Flashcards
What’s a sole trader
Business owned by one person
What’s a partnership business
2+ people who combine their skills and money
Advantages sole trader
(4)
-cheap and quick formation procedure
-getting to keep all profit
-full control over business
-low profit = low tax
Disadvantages sole trader (6)
-unlimited liabilities
-no separation between owner and business
-more capital to pay
-more work
-full responsibility over tax + debt
-high profit = more tax
Advantages partnership
(5)
-cheap and easy to establish
-more ideas
-better decision making
-low profit = low tax
-pay for own share
Disadvantages partnership
(5)
-no separation between owners and business
-less control
-could be slow
-high profit = high tax
-unlimited liability
Tax definition
A financial charge on taxplayers by the government
Continuity definition
Length of existence of business
Legal entity > exists after death of owner(s)
Legal persona definition
Right of a business to enter contracts, own property and sue
Must be registered to do this
Capital definition
Money and possessions owner contributes to the business
Progressive tax definition
High profit high tax
Business partnership agreement
Definition
Agreement of % of income for each person
Liability for debts definition
What owner(s) takes responsibility for
Legal entity > low risk of unlimited liability
Not legal entity > high risk of unlimited liability
Jointly liable for debt definition
Deal with business’s debt (period)
Severely liable for debt definition
Only pay based on contribution
