Types of business Ownership Flashcards
What is a sole trader business
A sole trader is a business structure simply run by one individual.
- cannot operate a law firm, bank, or building society.
- In order to become a sole trader, one must obtain licenses to manage certain types of businesses that require them, such as hotels, taxis, bars, or nightclubs.
- Profession Qualifications must also be obtained to run a business that would require doctors, dentists, accountants, etc.
Waht are some advantages of a sole trader
- The owner receives all the profit made from the company
- The owner has great control over the business and all the decisions made
- Simple establishment
- Privacy
What are some disadvantages of a sole trader
- Unlimited liability for debts as there isn’t a legal distinction between private and business assets
- The capacity to raise capacity is limited
- All decision are up to you
- Size of business limited due to owner’s weath
What is a partnership
A Partnership is the most straightforward form of joint ownership for two or more individuals. Limited partnerships (LP) and limited liability partnerships (LLP) are the two most popular forms of partnerships. A partnership is usually a number of twenty people, however, in circumstances such as accountancy professions there can be up to 100 partners. If the business doesn’t contain the names of all the business partners then it must be registered under the Business Name Act (BNA).
- Limited to 20 members
What are some advantages of a Partnership?
- Liability of the business is shared between you and your partner
- Shared responsibility
- Establishment is simple and less expensive than a company
- Business dealings don’t have to be revealed to outsiders
What are some disadvantages of a Partnership?
- Shared profits
- Unlimited liability
- Common disagreements
- Partnerships don’t last long as they may dissolve in a partner’s death or the event of something happening stated in the partnership agreement
What is a company
Advantages of a company
- Shareholders have limited liability showcased by including the abbreviation ‘Ltd’ in the company name
- Large amounts of capital leading to a larger company
- Ownership and management can be separated into different departments
- A company can be continental and still continue in terms of owners changing or in case of death
- Qualified and suited staff and be employed to operate the business
Disadvnatges of a Company
- More costly and time-consuming
- Subject to many government regulations especially those under a Company Act or Code
- Must present many different documents in order to run
What is a proprietary company
A proprietary company is a company that can’t raise money from th public, has at least 1 shareholder and a maximum of 50 non0 employee shareholders and has the word proprietary or Pty included in its name
What is the partnership Act 1895?
A law of the parliament of WA that regulates the conduct of partnerships, and that they must have a partnership agreement.
