L3: Business Organisations

Question 1

State 3 advantages of Sole Proprietorship

Answer 1

1. Profits entirely belong to the sole proprietor.
2. Termination is easy as one just needs to send a notice of termination to ACRA within 1 month of cessation of business.
3. Have full control and authority of business, less management conflict as he does not need to report to other people.

Question 2

State 3 disadvantages of Sole Proprietorship

Answer 2

1. No separate entity
   - He owns the business and and liabilities of business are his personal liabilities.

-Can be sued for debts of the business.

2. No continuity in existence
   - Death
   - Mental incapacity / bankruptcy
   = end of business
3. Limited management skill
   - Sole proprietor may not be able to expand his business as he may be limited by his management skills

Question 3

State 2 partnership advantages

Answer 3

1. Commercement is easy. Register with ACRA

2. All partners have full control over the running of business

Question 4

State 2 partnership disadvantages

Answer 4

1. No separate entity
   - Each partner is liable for all debts and legal obligations of business
2. No continuity in existence
   Partnership cease to exist upon death/bankruptcy of partners

Question 5

State how a partnership is dissolved

Answer 5

1. By one partner giving a notice to the other
2. One of the partners become bankrupt / dies
3. If an event makes the partnership business unlawful

Question 6

State 2 Limited Liability Partnership advantages

Answer 6

1. Commencement is easy
2. Limited liability for debts of business
   Not liable for any debts that exceed investment in the business

Question 7

State 2 Advantages of company

Answer 7

1. Members not liable for company’s losses

2. Company enjoys perpetual existence