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BLP > Types Of Business > Flashcards

Types Of Business Flashcards

1
Q

Sole trader

A 
No formalities 
On death or retirement business ceases 
Alone but may have employees
Unlimited liability - personal liability 
Pay income tax on profits 
Sole right to make decisions
Owns all assets
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2
Q

What is a Partnership according to S1 PA1890

A

Two or more people run and own a business together with a view to making a profit

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3
Q

Which act governs partnerships

A

Partnership act 1890

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4
Q

Hallmarks of a partnership

A

Unlimited liability - personal- joint and serveral
Pay income tax on profits
Buy out on death or retirement or it ceases
No formalities
Share decisions
Share ownership of assets
Share profits and losses
No new partners without consent
Don’t inherit debt, take it with you but can disregard if all Ps agree
Need consent of all Ps to change name

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5
Q

Limited partnership leg

A

limited partnership Act 1907

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6
Q

Requirements of a Limited Partnership

A

1 unlimited and 1 limited partner

Limited to what they put in

No management, no binding decisions, cannot remove contribution or become unlimited

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7
Q

Form to register a limited partnership and leg requiring registration

A

Form LP5

Register with register of companies under S8 LPA before trading

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8
Q

When does a limited partnership come into existence

A

Date of registration certificate

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9
Q

Meaning of unincorporated business

A

No separate legal personality

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10
Q

Meaning of incorporated business

A

Legal entity separate from owners

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11
Q

Another name for a joint venture

A

Contractual co-operation

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12
Q

What is a joint venture

A

Two or more parties run business on basis of co-operation agreement

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13
Q

Meaning of unlimited company

A

Finances can be public because they have unlimited personal liability

Defined in S3(4) CA

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14
Q

Leg definition of limited company

A

S3(1) CA liability of members is limited by constitution

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15
Q

Two ways to limit liability in limited company

A

Shares

Guarantee

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16
Q

What does it mean if a company is limited by guarantee

A

members agree to pay a specific sum to creditors in event company is wound up

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17
Q

What does it mean if a company is limited by shares

A

Liability of members is limited to amount they agreed to pay for their shares

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18
Q

Two types of company limited by shares

A

Private company and public company

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19
Q

Leg definition of a private company limited by shares

A

S755 CA - cannot raise money from public by issuing shares

Only needs one director

20
Q

What is a public company limited by shares

A

A company with share capital which complied with CA to enable it to register as such. Can raise money from public

Must have two directors

Constitution must state it is public

Must have PLC in name

Owners must invest a specified amount of money for use by the company

21
Q

Requirements of a company

A

Corporation tax (not IT or CGT)
Comply with CA 2006
Register documents with registrar of companies
Separate legal personality

22
Q

Differences between partnership and joint venture?

A

partnership between people but JV between companies or people
JV limited in scope and duration for a particular project but partnership for a business long term
Partnership is co-owning a business with a view to make a profit but aim in JV may not be to make profit; it could be for research or to combine resources.

23
Q

How to end a partnership made by deed

A

Notice in writing and signed

24
Q

When does a partnership come to an end?

A

If entered into for a fixed period of time or for a fixed project then it will dissolve when these come to an end. Otherwise on notice or death and bankruptcy unless an agreement otherwise.

25
Q

How to tell if someone is a partner of the partnership

A

this is a matter of intention. they are a partner if they intended to create a partnership.

26
Q

How much involvement must a partner have to be classified as a partner of the partnership?

A

There is no minimum threshold (can be silent, no participate in profits or receive a fixed sum) - still a partner if they intend it

27
Q

What are capital profits?

A

Money made off the back of the money already out into the business

28
Q

What are income profits?

A

Any money made from the actual business activities

29
Q

Is a partner entitled to interest on their contributions?

A

If they made a payment beyond the amount of capital which he agreed to subscribe, he is entitled to interest at 5% per annum from the date of the payment

30
Q

How to vary the rights and duties of partners

A

Consent of all the partners- this can be express or inferred from a course of dealing

31
Q

What happens to a partnership on death or bankruptcy

A

Dissolves unless agreement otherwise

32
Q

What happens to a partners liability for debts when they die

A

Estate is liable for the debts subject to prior payment of other debts

33
Q

Can a retiring partner be discharged from liability of the partnerships debts?

A

Yes. Need agreement between retiring partner and firm as newly constituted and creditors. This agreement may be express or ibferred from course of dealings between the creditors and the firm as newly constituted.

34
Q

Why put a notice in the London Gazette and remove the partner’s name from the stationary when they leave?

A

to ensure that people dealing with the firm no longer have any rights against the leaving partner

35
Q

Where are the statutory books kept

A

Registered office, SAIL, central record at CH

36
Q

How long to keep minutes of board meetings and GM and record of outcome of written res

A

10 years at office or SAIL

37
Q

What kind of account records must all companies keep

A

Adaquate

38
Q

Ds responsibilities regarding accounts

A

Ensure accounts are provided for every financial year
Ensure accounts provide true and fair account of state of company
Prepare account for each financial year to accompany account

39
Q

Do all companies need to provide a D report to accompany accounts

A

All except small and micro entities

40
Q

What is a small company

A

Balance sheet not more than £5.1m a year
Turn over not more than £10.2m
No more than 50 employees

41
Q

What is a micro entity

A

Balance sheet not more than £316,000
Turn over not more than 632,000
No more than 10 employees

42
Q

Who must D circulate accounts report and auditors report to

A

All S
Debenture holders
Anyone entitled to notice of GM

43
Q

Which companies must file accounts and Ds report at CH

A

All apart from small and micro entities

44
Q

When must accounts and Ds report be filed at CH

A

9 months from end of account period for private companies
6 months for public companies
3 months for newly incorporated companies

45
Q

Which companies must file confirmation statement

A

Every limited company and LLP

Or offence

46
Q

How long to file confirmation statement

A

Within 14 days from the company’s confirmation date which is the anniversary of its incorporation

47
Q

What is a confirmation statement

A

It gives CH a yearly snapshot of the management and ownership of the business

BLP (22 decks)

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