Types Of Business Flashcards by Hannah Moses

Sole trader

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

How well did you know this?

Not at all

Perfectly

What is a Partnership according to S1 PA1890

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

How well did you know this?

Not at all

Perfectly

Which act governs partnerships

Partnership act 1890

How well did you know this?

Not at all

Perfectly

Hallmarks of a partnership

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

How well did you know this?

Not at all

Perfectly

Limited partnership leg

limited partnership Act 1907

How well did you know this?

Not at all

Perfectly

Requirements of a Limited Partnership

1 unlimited and 1 limited partner

Limited to what they put in

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

How well did you know this?

Not at all

Perfectly

Form to register a limited partnership and leg requiring registration

Form LP5

How well did you know this?

Not at all

Perfectly

When does a limited partnership come into existence

Date of registration certificate

How well did you know this?

Not at all

Perfectly

Meaning of unincorporated business

No separate legal personality

How well did you know this?

Not at all

Perfectly

Meaning of incorporated business

Legal entity separate from owners

How well did you know this?

Not at all

Perfectly

Another name for a joint venture

Contractual co-operation

How well did you know this?

Not at all

Perfectly

What is a joint venture

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

How well did you know this?

Not at all

Perfectly

Meaning of unlimited company

Finances can be public because they have unlimited personal liability

Defined in S3(4) CA

How well did you know this?

Not at all

Perfectly

Leg definition of limited company

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

How well did you know this?

Not at all

Perfectly

Two ways to limit liability in limited company

Guarantee

How well did you know this?

Not at all

Perfectly

What does it mean if a company is limited by guarantee

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

How well did you know this?

Not at all

Perfectly

What does it mean if a company is limited by shares

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

How well did you know this?

Not at all

Perfectly

Two types of company limited by shares

Private company and public company

How well did you know this?

Not at all

Perfectly

Leg definition of a private company limited by shares

S755 CA - cannot raise money from public by issuing shares

Only needs one director

What is a public company limited by shares

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

Requirements of a company

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

Differences between partnership and joint venture?

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.

How to end a partnership made by deed

Notice in writing and signed

When does a partnership come to an end?

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.

How to tell if someone is a partner of the partnership

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

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

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

What are capital profits?

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

What are income profits?

Any money made from the actual business activities

Is a partner entitled to interest on their contributions?

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

How to vary the rights and duties of partners

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

What happens to a partnership on death or bankruptcy

Dissolves unless agreement otherwise

What happens to a partners liability for debts when they die

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

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

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.

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

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

Where are the statutory books kept

Registered office, SAIL, central record at CH

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

10 years at office or SAIL

What kind of account records must all companies keep

Adaquate

Ds responsibilities regarding accounts

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

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

All except small and micro entities

What is a small company

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

What is a micro entity

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

Who must D circulate accounts report and auditors report to

All S Debenture holders Anyone entitled to notice of GM

Which companies must file accounts and Ds report at CH

All apart from small and micro entities

When must accounts and Ds report be filed at CH

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

Which companies must file confirmation statement

Every limited company and LLP | Or offence

How long to file confirmation statement

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

What is a confirmation statement

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