Sole Traders, Partnerships Flashcards
1
Q
What liability do Sole Traders and Partnerships have?
A
Unlimited Liability: The owners are fully responsible for any debts incurred.
2
Q
How many owners are in a Sole Trader and Partnership business?
A
Sole Trader: 1
Partnership: 2 or more.
3
Q
What’s the source of finance for Sole Traders and Partnerships?
A
Sole Traders: Own money
Partnerships: An additional partner can be brought in to provide capital “Sleeping Partner”
Loans and own money.
4
Q
What are advantages of Sole Traders?
A
- Cheap and easy to form without legal procedures
- Owners keep all of the profit
- Independent
- Don’t have to publish their finances
5
Q
What are disadvantages of Sole Traders?
A
- Unlimited liability
- Responsibility for losses
- Banks are less willing to lend money
- Likely to be small due to limited funds.
6
Q
What are advantages of Partnerships?
A
- More people which means more capital to invest
- Can discuss issues and share responsibilities
- Financial affairs don’t have to be published
7
Q
What are disadvantages of Partnerships?
A
- Unlimited Liability
- Each partner is liable for the debt
- Each partner has to raise their own capital
- Lack of continuity
