• 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...


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.


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.


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)

    Wines Plus has decided to make their business a partnership, as they are a married couple and as a married couple they aim to share everything. They both wanted to be involved in a business they both wanted to run.

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

    ( Microsoft owner Bill Gates and his career has hold the positions of CEO and chief software architect, and he remains the largest individual shareholder with more than 8% of the common stock. ( Oxfam has no owners and it's supervised by trustees and usually set up to provide a service to the wider community.

  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 ...

    Co-operatives � A cooperative is owned by the people who work for it. Employee's buy a share in the organisation and have a vote in making decisions. � Members receive a share of the profits in the form of a dividend, when they leave they can take their funds back.

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

    and many other benefits to their employees and manager to retain them. Vectone Gnanam Telecom is well known to the ethnic minorities race in the Britain such as many Asian and African peoples who live in Britain use their services to call their relations at home.

  2. Explain the purpose of keeping accurate financial records.

    Ratio Analysis For any company such as SPA Ltd it must undergo how well the company is running. This procedure is gone through a ratio analysis consideration, where a selective amount of ratios are used to come up with an outcome of analysis and evaluation of the position of the company.

  1. Introduction to J Sainsbury plc

    The hierarchy is the traditional way of developing Sainsbury's, which is quite common in the retail sector. The structure of Sainsbury's is a hierarchical structure. This helps Sainsbury's in many ways. When working in Sainsbury's, employees frequently hear reference to 'reporting to the line manager', meaning the person to whom employees are directly responsible to.

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

    does or what they plan to do in order to improve the business, its sales, awareness and so on, it includes activities include sales,advertising,sales etc. Most importantly it includes the four marketing tools of the marketing mix: Product, Price, Promotion and Place.

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