• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Types of Business Ownership and sources of finance.

Extracts from this document...

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.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Structures, Objectives & External Influences section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Structures, Objectives & External Influences essays

  1. Marked by a teacher

    ASDA's Ownership

    4 star(s)

    shareholders might sell, but this also leaves insufficient funds to renew machinery or equipment. * Other examples of PLC's are Sainsbury's, Marks & Spencer and Tesco. E). Each business has a type of ownership. Wines Plus's ownership is a partnership and ASDA's ownership is a PLC (public limited company).

  2. Btec National Business Level 3 Year 1 - Exploring Business Activity

    The government is elected to set policy for agencies. The department for Customs and Revenue works on behalf of the government and is staffed by civil servants, known as customs and revenue officers. Their jobs are to take out income tax and other taxes on behalf of the government, to

  1. BTEC Business. Organisational Structure in different types of business.

    Production managers will decide how goods will be produced-that is the methods of production. They also need to create schedules for when employees will carry out particular tasks Production functions include: * Planning production schedules to maximise machine capacity and staff levels * Storing and checking the stocks of raw materials * Ordering(often buying)

  2. The Business Environment Coursework. Describe the type of business, purpose and ownership of ...

    This is a Limited Liability Company and under this more flexible entity, the owners of the business or franchise have some protection from what the company, as a separate legal entity, does. What attracts most people to an LLC is the limited liability for the actions and debts of the franchise.

  1. For my portfolio, I was asked to do an assignment on two businesses. I ...

    Safeway lodged a complaint with the ASA to contest a claim on Tesco that it was 14% cheaper than them on food and drinks. But the ASA upheld Boots' complaint against Tesco, which included a claim that it was 16% cheaper than Boots on shampoos and conditioners.

  2. Departments and their roles within a business.

    This will result in huge losses of capital and a big dent in the profit and loss accounts. The marketing department and operations/production department will have to communicate so the productions department knows how much to produce so they can distribute the correct and exact amount, ensuring that the business does not waste any capital on additional products.

  1. Introduction to Business Assignment

    All aspects of their quality assurance procedure are documented with accurate information that is correctly transmitted and recorded. For e.g. in their design department they are very frequently asked to modify light bulbs as opposed to buying their normal design.

  2. Investigating Business. Tesco PLC. I will be describing the aims and objectives of ...

    Promotion ? that is used to focus a marketing strategy in a coherent direction. ?Place?, however, is often over-looked due to the lack of flexibility and long-term logistics of placing products effectively ? distribution is more likely to be adapted to meet customers? needs instead.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work