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Ownership and finance for my business. The business I am doing is a clothes shop and I am looking to find out how this type of business will start up and get established.

Extracts from this document...

Introduction

BTEC NATIONAL AWARD IN PERSONAL AND BUSINESS FINANCE UNIT 3: FINANCIAL SERVICES TO SUPPORT BUSINESS Task 1 The business I am doing is a clothes shop and I am looking to find out how this type of business will start up and get established. Part a - Legal structure (P1) In this task I am going to create a fact file on the different legal structures available to a new business starting up. This includes: * Sole traders * Partnerships * Private limited companies * Charitable company * Franchise * Buy out. Sole Traders A sole trader is a type of business, which is not legally separate from its owner. The owner pays off all the debts of the business. As a result, the owners are personally liable for the firm's debts, and may have to pay them out of their own pocket. A sole trader does not have to pay corporate taxes, but the person who organized the business pays personal income taxes on the profits made. This will make accounting easier. Advantages: The firm will be small and easy to set up. Only a little bit of capital will be needed to start up the business so the initial start up cost will be small. The wage bill will be low because there will be few or no employees. The business will be easier to control because the person who organized the business will be able to control everything without consulting anyone. Disadvantages: The sole trader will not have anyone to share the responsibility of running the business. For example the sole trader might not be familiar with operating the accounts. Sole traders are constantly working full time and will find it very hard to take time off even if they are ill. There is also a risk of unlimited liability where the sole trader will be forced to pay the debts of the business using their personal money. ...read more.

Middle

The advantage with a business credit card is that a business such as the clothes shop can buy things at times when they may not have the money. The disadvantage is that it will have to be paid back with interest. It will not be suitable for a small business like a clothes shop. Second Mortgages: A second mortgage typically refers to a secured loan (or mortgage) that is subordinate to another loan against the same property. A business will use a second mortgage to buy more property or land. A business can ask to change their loan back to the original amount if they would like some extra money. For example if a business has paid �50000 of a mortgage they can ask to borrow money up to �50000 and return the mortgage back to its original level or the extended level. This is a source of finance. The advantage is that instead of raising funds by selling a share in the property or the business to an investor, you retain complete ownership. The lender is only entitled to an interest return on its mortgage, not a percentage of ownership that an investor would expect. Also they can only exercise the right if you default on payment. You retain all the benefits of ownership in an asset that has the potential to increase in value. Interest payments on your mortgage are tax deductible and are made with pre-tax money. A mortgage gives you access to capital that you would not normally have access to with minimal up-front payments and the flexibility to design a repayment plan that suits your needs. In addition Mortgage schedules are pre-set, making cash management more predictable. The disadvantages are that the nature of a mortgage requires you to pledge the purchased property to the lender. If you default on the mortgage, the lender is able to foreclose the property and sell it to repay the outstanding money owed to the lender. ...read more.

Conclusion

2. Over the course of BP11, British Airways will launch services to 13 new destinations from Gatwick. BA has purchased two new Airbus A318s to offer business class-only flights between London City airport and New York. Finally, through our new subsidiary OpenSkies, due to launch in June of this year, they will fly directly between continental Europe and the US. Long Term 1. BP11 establishes corporate responsibility as a new priority for the business. They will be doing even more to address their environmental impact. This will include cutting their carbon emissions further; reducing and recycling waste; minimising our contribution to air and noise pollution; and continuing to invest in their community relations programme. Our partnership in the London 2012 Olympic and Paralympics Games will be the focus for some of their community activities, including community work in East London and the launch of a travel bursary scheme for young athletes. British Airways are putting corporate responsibility centre stage because they believe it matters and will help them stand out from their competitors. BA intends to lead their industry in corporate responsibility. 2. This strategy for expansion is my own thought of what British Airways can do to improve. It is not part of BP11. I think that British Airways should aim to fly to every country in the world by 2030. This will be a very tough challenge due to the funding and lack of vacant flight routes. BA can do this by merging with other airlines companies which will enable them to use flight routes which they have no access to. With the new Airbus A380 in action, BA should consider investing in the planes because they are very efficient because they can take twice the amount of the Boeing 747 in a single flight. [T1]Miss can you give me more information to put in the sources of initial finance because I don't think it is enough. [22]Not sure if I have done this one good!! ?? ?? ?? ?? Tunji Alli 13 A Unit 3 ...read more.

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