The Structure Of Businesses

Question 1

How is a sole proprietorship structured?

Answer 1

• business is owned by the owner
• owned by one person
• quite small in terms of size
  (sales, revenues, number of employees)
• easy to setup
• no legal requirements to produce accounting info to other users; however the owner must produce accounting info for the taxation authority
• owner has unlimited liability

Question 2

Explain the structure of a partnership

Answer 2

• partnership is owned by business owners
• owned by 2-20 ppl
• generally small in terms of size (some can be large)
• can be restructured or dissolved by agreement of the partners
• the partners of the business have unlimited liability

Question 3

Explain the structure of limited companies

Answer 3

• business is not necessarily the owners
• the no. Of individuals who subscribe capital and become owners may be unlimited - shareholders
• range in size from small to large
• owners have limited liability
• requirement for publishing audited financial statements

Question 4

Explain the structure of a limited liability partnership

Answer 4

• cross between partnership and limited company
• members in an LLP can’t lose more than invested
• tax benefits and flexibility in management
• the definition of limited varies by country in the case of the partnership

Question 5

What are examples of LLPs?

Answer 5

PwC
KPMG

Question 6

How are the following firms structured?

Answer 6

Google
Ernst young
John Lewis
Ikea