Ownership Structures

Question 1

Partnership

Answer 1

Is two or more persons in business together operating under their own names or a registered business name.
Advantage:
- greater access to capital and skills

Disadvantage:
-partners must share control of decision making, which may lead to disagreements and personal clashes.

Question 2

Proprietary company (Pty Ltd)

Answer 2

Is a registered legal entity with the right to do business in its own right.

Advantage:
- limited liability means owner have no responsibilities for liabilities and debts.
Disadvantage:
- Establishment costs are high

Question 3

Source Documents

Answer 3

Source documents have two separate yet related functions:

1. They provide the verifiable evidence of details of a transaction, thus ensuring that the information in the accounting reports will be reliable.
2. They provide the evidence that is required by the Australian Tax Office (ATO) relating to the firms income tax and GST.

Question 4

Sole proprietorship

Answer 4

Is owned by a single individual, operating the business in their own right under their own name.
Advantage:
-easy and cheap to set up
-owner has full control over decisions

Disadvantage:
- owner had unlimited liability