Describe the Different Forms of Ownership of Businesses

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Unit One - Task One  - Investigating Business

Business Ownership

 Sole Trader

A sole trader is a business owned by the person, even though they may employ workers. There are approximately 2.8 million sole traders in the UK and these businesses are simplest and most popular way of setting up the Business Ownership. A sole proprietorship also known as a sole trader or simply proprietorship is a type of business who is owned or run by one person between the owners and there is no legal distinction also.

For Example, Hairdressers, Newsagents’ shop (many small shops) My uncle runs 3 shops as sole trader and my dad is also part of  his business as in partnership in Premier convenience shop at Rochester, plumbers, electrician, butchers, florist, window cleaner and many more are a sole trader that includes several retailers. This numeral of examples provides specialist and individual services. Any sole trader does not divide legal existence from their owner; a sole trader pays the money to employ out of their own pocket money.

There are some advantages and Disadvantages of Business Ownership as Sole Trader

The Advantages are:

  • They are really straightforwardly to set up: you can easily set up and a sole proprietor enjoys considerable degree of freedom in Business decisions, your own decision to run the business and at the same time you can get chance to be your own boss.
  • Flexible working hours and you are in charge of time making and keeping and they are no argue and disagree with it
  • All the profits: All the income can only belongs to you.  
  • There are tax advantage of being a sole trader
  • Accounts are private: it can only send its accounts to the inner profits.

The Disadvantages are:

  • Deficient of connection (continuity): Some sole trader might have staff of one. So owner might have some difficulty to get many jobs done because of large organisations and this can also time consuming, owner might lose some amount of profit.
  •  The main disadvantage is that there is also risk of Unlimited Liability, where the sole trader might can be strained to sell his/her individual assets to cover up debt help by business. Sole Traders invest their own money to run their own business, if they does not make profit then they might cause a lost in business and they have to invest their own money into business again, this known as Unlimited Liability. For example, they might be forced to sell their own house/car in order to these debts if the sole trader is legal obligation.
  • Is responsible for all debts.
  • If business owner became ill or went to holidays , so employee might not be able to come to work, although illness insurance is available unlikely to get levels of profits in to the business, but still there are more chances to get problems in to business.
  • Employee or Business owner might have work for longer hours; this makes it a bit difficult to raise capital and to expand.
  •  If Business owner may have no experience of using a business or have any business skills, e.g. in completing account, paying wages, managing staff then it might be hard to handle the business.

If a sole trader wants to expand his business or if he need help then the Sole Trader business can be change in to partnership.

 

Business Ownership

Partnership

What is Partnership?

Partnership is business owned by two or more than twenty people. Successful partnership is often based on trust, equality and many communal understanding. A contract called a deed of partnership is normally drawn up. Doctors, dentists, solicitors, accountants and small businesses are characteristic example of professional who may go into partnership together.  

My dad has partnership with my uncle who runs 3 retailing shops in different places such as one in Rochester, strood and recently bought new one in Derby.

“Partnership is the relation between persons who have agreed to share the profits of a business carried by all of them acting for all”  

Advantages of being in Partnership:

  • The main advantage of a partnership over a sole trader is shared responsibility. For example, if a hairdresser were in partnership with someone with a business background, one could concentrate on providing the salon service and other on handling the finances.
  • Any problems or difficulty can be shared and discussed.
  • By sharing their new ideas, ability to each other, you can invest some more profit into the Business.
  • Responsibly can be mutual, and they can dedicate them self into dissimilar areas.
  •  Between partners they have more facts than a single person which really helps capital to rise and the business can be invested even more than your expectation.  
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Disadvantage of being in Partnership:

  • The Business owner has to share the profits.
  •  The partner may not be agreeing with each other and some member of people may work harder than others to show their capability to others, which may cause struggle into business.
  • The partner have unlimited liability for all the debts.
  • An action of decision making in slower.

What is Deed of Partnership?

A deed of partnership sets out the right of each partner, such as the ways dividends are divided. A Partnership deed covers real property to multiple owners who are identified ...

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