TYPES OF BUSINESS ORGANISATIONS BY VRISHA VYAS Sole Traders and Partnership

WHAT IS A SOLE TRADER? A sole trader is a person who sets up and owns their own business. They may decide to employ other people but they are the only owner. A sole trader has unlimited liability. A sole trader is a person who sets up and owns their own business. They may decide to employ other people but they are the only owner. A sole trader has unlimited liability. As a sole trader, your business is owned entirely by you, grown by you and ultimately succeeds or fails by you. This also means you are entitled to all profit that the business makes. As a sole trader, your business is owned entirely by you, grown by you and ultimately succeeds or fails by you. This also means you are entitled to all profit that the business makes.

SOLE TRADER: THE MOST COMMON FORM OF BUSINESS ORGANISATION Sole trader is considered to be the most common form of business organisation. One of the major reasons behind this is that there are a very few legal requirements to set it up. Sole trader is considered to be the most common form of business organisation. One of the major reasons behind this is that there are a very few legal requirements to set it up. The legal requirements are: The legal requirements are: 1.The owner must register with,and send annual accounts to, the Government Tax Office. 2.The name of the company should be registered. 3.The sole trader must observe laws which apply to all forms in the industry.

ADVANTAGES OF BEING A SOLE TRADER 1.Very few legal requirements 2.You are your own boss 3.Freedom of choice for holidays, hours to work, prices to be charged and whom to employ. 4.Better costumer service and satisfaction. 5.Profits need not to be shared. 6.Complete privacy towards business matters expect for informing the Tax Office.

DISADVANTAGES OF BEING A SOLE TRADER 1.No help from others for business matters. 2.No benefits of limited liability. 3.Cannot expand the business if you don't earn a lot of profit. 4.No benefit from the economies of scale. 5.The business cannot be run any further after the owner's death.

WHO IS SUITABLE TO START A SOLE TRADER BUSINESS 1.People who are setting up a new business. 2.People who do not need much capital to get going in the business. 3.People who are mainly dealing with public.

WHAT IS PARTNERSHIP? Partnership is a type of business organisation in which two or more individuals pool money, skills, and other resources, and share profit and loss in accordance with terms of the partnership agreement. Partnership is a type of business organisation in which two or more individuals pool money, skills, and other resources, and share profit and loss in accordance with terms of the partnership agreement. A partnership agreement is the written and legal agreement between business partners. It is always recommended but not essential for partners to have such an agreement. A partnership agreement is the written and legal agreement between business partners. It is always recommended but not essential for partners to have such an agreement.

ADVANTAGES OF A PARTNERSHIP BUSINESS 1.More capital can be invested leading to expansion of business. 2.Less responsibilities. 3.More profit is earned and all the loss is shared.

DISADVANTAGES OF A PARTNERSHIP BUSINESS 1.The partners don't have the benefit of limited liability. 2.If one of the owners dies then the business will end. 3.Waste of time to agree on one point and inform all the partners. 4.Inefficient partner can bring loss to all. 5.Most countries allow only 20 partners making the capital limited.

WHO IS SUITABLE TO START A PARTNERSHIP BUSINESS 1.People who wish to form a business with others but do not want legal complications. 2.Professional bodies allowed professional people to form partnership not a company. 3.Partners are likely to be well known to each other.

WHAT IS A LIMITED PARTNERSHIP? Limited partnership offers partners limited liability but shares in such a business cannot be bought or sold.this type of partnership is a separate legal unit which still exists after a partners death. Limited partnership offers partners limited liability but shares in such a business cannot be bought or sold.this type of partnership is a separate legal unit which still exists after a partners death. Partners’ responsibilities differ as: Partners’ responsibilities differ as: 1.‘general’ partners can be personally liable for all the partnerships’ debts 2.‘limited’ partners are only liable up to the amount they initially invest in the business

Summary of Sole traders and Partnership businesses