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Types of Business Ownership and sources of finance.

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Introduction

JF Computing 3/9/2011 Fernando Del Rio Perez 1. Sole trader and sources of finance Being a sole trader is the simplest way to run a business - it does not involve paying any registration fees, keeping records and accounts is straightforward, and you get to keep all the profits. However, you are personally liable for any debts that your business runs up, which make this a risky option for businesses that need a lot of investment. Whether you are thinking of starting up your own business or if an existing business is thinking of expanding, it is likely that money will be needed. Where does Jane Flowers get the finance to start a business? To gain extra finance, a business can take out a loan from a bank or other or other financial institution. A loan is a sum of money lent for a given period of time. Repayment is made with interest. The lender of money needs to know all the business opportunities and risks involved and will therefore want to see a detailed business plan. The lender may also want some form of security should the business run into financial difficulty, and may therefore prefer to provide a secured loan. Another way of raising short-term finance is through an overdraft facility with a bank. ...read more.

Middle

Unlike a limited company, a partnership has no legal existence distinct from the partners themselves. Partners are jointly liable for debts owed by the partnership and so are equally responsible for paying off the whole debt. They are not severally liable, which would mean each partner is responsible for paying off the entire debt A partnership is a relatively simple and flexible way for two or more people to own and run a business together. However, partners do not enjoy any protection if the business fails. Partners raise money for the business out of their own assets, and/or with loans. As partners are self-employed, they are taxed on their share of the profits as well as they need to pay Class 2 and Class 4 National Insurance contributions. There are other advantages of partnership such as: * There are few formalities to setting up and trading as a partnership. * The financial resources of more than one person are likely to be better than in a sole proprietorship. * Responsibility can be shared, thus allowing time off Limited liability companies Limited companies exist in their own right. This means the company's finances are separate from the personal finances of their owners. Shareholders may be individuals or other companies. ...read more.

Conclusion

By starting with a thorough financial plan, business owners are better able to weather the bad times and excel during the good times. Proper planning means fewer surprises down the line. By having a proper financial plan in place, a business owner is prepared to deal with outstanding debt and rising costs by anticipating these things in advance. In addition, financial planning reduces uncertainties with regards to changing market trends which can be faced easily through enough funds. Other of the biggest reasons why financial planning is important to a business is that it gives the owner a chance to estimate their earnings for an upcoming period. This period may be five years or it may be two months. It makes possible some growth and expansion programmes which helps in long-run survival of the company. The need for information Sales Managers * Costs of logistic * Revenues from sales * Cost of production * Product contribution margins * Incentive Budget * Travel expenses (airplanes, hotels etc..) * Consumer margins * Available payment methods and costs of it Finance department * Selling prices * Costs of materials * Wages * Debts * Bills * Payments * Interest * Cost of fix assets and machinery * Annul profit * Purchases and sales * Cost of the premises(Purchase or rent) * Credit * Suppliers 4. ...read more.

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