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Sole TraderA sole trader is a business that is owned and controlled by one person. The business is more commonly known as, a 'one man business'.

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Sole Trader A sole trader is a business that is owned and controlled by one person. The business is more commonly known as, a 'one man business'. The business is either owned by private individuals for example friends and family, this is called the private sector, or by the public for example the government, this is called the public sector. A sole trader is: * The single owner of the business. * The person who makes all the decision. * The person who is responsible if anything should go wrong. Many people are opting to set up businesses in the private sector such as sole traders, partnerships, franchises (the right to trade under an established name) and limited companies. It is also quite straightforward is set up. Four out of ten businesses that registered for Value Added Tax (VAT) are sole traders; this shows the vast amount of businesses setting up as sole traders. Unfortunately many sole traders will not reach Vat threshold, which is the reason why even more businesses are sole traders. ...read more.


* Can keep business affairs private. Partnerships A partnership is a agreement between two or more people to take joint responsibility for the running of a business, to share in the profits and the risks. This means workload can be spread out and the risks of the business are shared. In many cases, it is friend or family of the owner or an employee that will be taken on board as a partner. In other words, a partnership means:banned. * Shared ownership. * Shared decision making. * Shared workload. * Shared profit. * Shared liability for debts. A partnership is almost as easy to set up as a sole trader. If no formal agreement is drawn up, then the rules of the partnership are as laid down in the 1980 Partnership Act. It is however, wise for the partners to draw up a special document, the deed of partnership Agreement, which outlines in detail: * How profits and losses are to be shared, if not equally. * How much money each partner is expected to put into the business. ...read more.


The disadvantages of a partnership are: * The partnership has unlimited liablility. * The partnership has a lack of continuity, e.g. if a partner dies than the partnership is automatically dissolved. * Partners can take decisions without consulting the other partners. * Even with the extra source of finance, there is still a lack of capital. * Disagreements between the partners. Code breakers! Sole proprietor: a one person business, the same as a sole trader or sole owner Unlimited liability: responsibility for the debts of the business extends to a person's personal wealth. Specialisation: concentrating on a particular task or job, being expert at it. Division of labour: splitting up the labour force into different specialisms so that each carries out his or her own specialism with greater efficiency. VAT threshold: the level of turnover at which the firm has to start paying value added tax. Delegation: giving jobs to other people, in a partnership this means that people use their skills where they will have the most effect. Deed of Partnership: a legal document that outlines how responsibilities, profits and workload are to be shared. Lack of continuity: because the partners make up the partnership, if one of them leaves, then the partnership is dissolved. The Partnership cannot be passed on or sold. ...read more.

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