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Business types The Sole Trader

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Introduction

The Sole Trader The Sole Trader is the most common form of business ownership where personal services are provided; little capital is needed to start the business; large scale production is not a major feature or benefit. This form of ownership is therefore widely found in service areas such as hairdressing, plumbing and window cleaning. The owner runs the business and can employ any number of people. Setting up as a Sole Trader is simple as there are few legal formalities. However there are some restrictions such as paying income tax, National insurance and complying with legislation such as the health and safety at work. Advantages * Owner receives all the profit if there's any * Simple and cheap to establish with few legal formalities * Able to respond quickly to changes in the market * Confidentiality is maintained as financial details do not have to be published * Decisions can be made quick * There are a variety of tasks * The sole trader can offer a personal service that the customer is prepared to pay for * If owner does not want to open one day he/she doesn't have to Disadvantages * The owner is likely to be short of capital for investment and expansion * Few assets for collateral to support applications for loans * Unlimited liability * It can be difficult for sole traders to take holidays * ...read more.

Middle

Going public is expensive because: 1. Lawyers are required to ensure that the whole procedure is correct 2. A merchant bank is often used to float the company 3. The share issue has to be over written (This means that if the shares are not sold the underwriter has to buy the remaining shares) 4. There are administration costs and glossy brochures to print Public Limited Companies: Advantages: * Huge sums of money can be raised * Can gain positive publicity as a result of trading on the Stock Exchange * Stock Exchange quotation offers access to large amounts of capital * Stock Exchange rules are strict * Suppliers will be more willing to offer credit to public companies Disadvantages: * Public companies are required to publish a great deal of financial information * Trading as a plc can result in hefty administrative expenses * A Stock Exchange listing means emphasis is placed on shirt term financial results, not long term performance * Setting up is expensive and cost millions of pounds * Plc are subject to take over Compared with sole trader and partnerships, a company; * Offers limited liability to potential investors which encourages investments * Has a separate legal existence from its owners and can own assets and sue or be sued in its own name * Is not affected by death or retirement of its owners because of its ...read more.

Conclusion

The Franchisor also takes a percentage of the profits of the business, without having to risk capital or become involved in the day-to-day management. The franchisee benefits from trading under a well-known name and enjoys a local monopoly. Training is usually arranged by the franchisor. The franchisee is his or her own boss and takes most of the profit. Types of franchise arrangements include: * Manufacturer-retail: petrol stations and car dealers * Wholesaler-retail: spar and other voluntary groups * Trademark-retail: 'fast food' outlets The franchisor: * Allows the trade name to be used * Gives support through a) Local/national marketing b) Training c) Financial and other advice * Supplies the d�cor and assists with layout * Provides the product The franchisee: * Agrees to follow rules and to meet set standards * Invests the capital required * Purchases only from the franchisor or other recognised suppliers * Pays royalties to the franchisor This document was downloaded from Coursework.Info - The UK's Coursework Database - http://www.coursework.info/ This document was downloaded from Coursework.Info - The UK's Coursework Database - http://www.coursework.info/ This document was downloaded from Coursework.Info - The UK's Coursework Database - http://www.coursework.info/ This document was downloaded from Coursework.Info - The UK's Coursework Database - http://www.coursework.info/ This document was downloaded from Coursework.Info - The UK's Coursework Database - http://www.coursework.info/ This document was downloaded from Coursework.Info - The UK's Coursework Database - http://www.coursework.info/ ...read more.

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