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

The Legal Status of a Business.

Extracts from this document...


The Legal Status of a Business When setting up my business there are many possibilities of what the business's legal status could be. One of the possibilities is to become a sole trader. Being a sole trader has many advantages: * The main advantage is that you have complete control of your business. This means that you can run the business just the way you want. * Another advantage is that this type of business is very easy to set up. It requires no long complicated documents to fill in so it is relatively easy to set up. * An advantage that would appeal to most sole proprietors is the fact that the sole trader gets to keep all of the profits that the business makes. This would appeal to most people, as the reason that people go into business is to try and make money. There are many disadvantages that would put people off being a sole proprietor: * The main disadvantage of being a sole proprietor is Unlimited Liability. Unlimited Liability. This means that the owner of the business is personally responsible for all of the debts and losses of the business. If the debts cannot be paid then the owner is declared bankrupt which means that his business will be sold and the money raised will be used to pay the debts. ...read more.


is declared bankrupt which means that his business will be sold and the money raised will be used to pay the debts. If the owner still has not managed to pay off the debts of the business then his personal possessions can be sold off to pay for the debts of the business. The personal possessions may include the house and car of the partners. * Another disadvantage of being in a partnership is the fact that partners could fall out about sharing the profits, the responsibilities of the partners and partners not pulling his/her weight. This is a disadvantage because if the partners fall out, inevitably the business would suffer and this could eventually lead to bankruptcy or the business failing. The Limited Company A public limited company has am more complicated set up than a partnership and a sole trader but it has different benefits. In the types of businesses that I have described the owners are actively involved in the running of the business (except for sleeping partners). In other businesses I have described ownership and work are combined. When setting up a limited company ownership and work are separated. In this type of business the shareholders are the owners of the business. However the business is ran by directors and paid employees. When setting up a limited company there are two options you can choose. ...read more.


Another advantage is that it is easy to raise the capital to set up the business because the founders of the business can invite many people to buy shares in the business. Although buying shares as an investment carries some risk if the business fails people are willing to buy them because their personal possessions are safe and the dividend (their share of the company profits) can be good. Another advantage for setting up a Public Limited company is the fact that the founders of the companies can keep control of the business by buying the majority of the shares. Disadvantages of the Public Limited Company The main disadvantage of running a public limited company is the fact that the business can sometimes become too big to run efficiently. The main disadvantage of setting up a Public Limited Company is the fact that it is more complicated to set up. This is because the founders of the business have to fill in the Articles of Association and the Memorandum of association. Another disadvantage for setting up a Public Limited Company is it is more expensive to set up. This is mainly because the founders of the business will need to employ a solicitor to register the company. Also, the company's affairs will be less private than either the sole proprietor or partnership. This is because in return for having limited liability status, their accounts have to be sent to the companies registration office every year, were other people may see them. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Business, Companies and Organisation, Activity 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 GCSE Business, Companies and Organisation, Activity essays

  1. English for business

    As far as, no matter how clever you are, how wealthy, how industrious, you still get 24 hours every day. What you need to do is to carefully manage the time you have got putting it to the best use possible.

  2. Business Studies

    New WTO rules give businesses of member countries an avenue to take action * Social/cultural - Languages - Tastes - Religion - Varying business practises and ethics > Culture will influence the marketing mix - products/promotions will need to be customised to suit the local culture > Religion can affect

  1. Business studies - Business Plan

    Stratified sampling helps to get a better overall view from the population. The type of market research I will be using will be primary research; I will hand out questionnaires and looking at my results. I have chosen primary research as I find it is the best way for me

  2. Business Ownership

    Disadvantage As Nokia is a private limited company, there will be many disadvantages. Nokia will has to comply with rules set down by the Companies Act, so proper audited accounts and annual returns have to be registered with the Companies House.

  1. Business Plan. After putting a lot of thought into what kind of business we ...

    A partnership business can be owned by 2-20 people. There are several types of ownership. The two most common types are general and limited partnerships. A general partnership can be form simply by an oral agreement between two or more people, but a legal partnership agreement drawn up by attorney is highly recommended.

  2. Business studies-create your own business

    The secondary research which I will be doing is getting a leaflet from a competitor such as another Chinese restaurant and I will use the internet as well, to look at competitor's websites, which will help me set up my website for my restaurant.

  1. Applied Business Unit 1

    Another factor which suggests asda is meeting their aims and objectives is the fact that sales have increased from 14.3 billion in 2005 to 14.9 billion in 2006. This suggests that customers are happy with Asda products and Asda are meeting their aim to be "Britain's best value retailer."

  2. people in business

    They do this by using primary research some of this research includes questionnaires that are given out in the stores and surveys which are designed to ask their customers question and to give their own opinion about the products that are sold in the store.

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