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What would be the advantages and disadvantages and disadvantages or remaining as a privately owned familly business with me as a sole trader?

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Introduction

Working in organisations A sole trader business consists of one who opens up a business on their own initiative. There are three types of sectors of businesses these comprise of the mutual, public and private sector. Private family businesses are include within the private sector. The following information is an describes the private sector: The private sector is made up of businesses and organisations that are owned by individuals or groups of the individuals. The private includes the following types of business/companies these are: Sole traders, Partnership, Private limited companies, Public limited companies and Franchises. A sole trader is a person who opens up a business on his or her own account (as mentioned above). A partnership is when two or more persons agree to carry on a business together. A private limited company cannot offer their shares for sale to the public at large, which makes their ability to raise money limited. A public limited company is an incorporated business and is a large organisation which shares are sold in vast numbers. Franchises are company's which are authorised to sell a goods or services in a particular place. As a small clothing and accessories business that has grown from a small company to a moderate sized business Mr cannon will benefit from a sole trading business analysing the characteristics. The characteristics of a sole trader include:- Setting up: Mr Cannon must register as self-employed. Liability: If the business fails, then the owner is fully responsible for all the business' debts. Management: The owner's word is final. Finance: More often than not, owner's personal money. Profits: All profits belong to the owner. Taxes Etc.: Self employed status. Even if the owner doesn't draw on his profits they are still taxed. Losses can be offset against tax on other income. Continuity: If owner dies or retires, the business may crumble What would be the advantages and disadvantages and disadvantages or remaining as a privately owned familly business with me as a sole trader? ...read more.

Middle

In the event of a legal claim against the business, where insurance does not cover the full extent of any damages awarded, the owner's personal assets can be attacked to pay the damages. Sole traders also do not have any help in the process of running the business. As a Sole trader work hours are extremely long it is also sometimes difficult to time for example if sole trader is ill, or feels as though they well entitled to a holiday. Sole traders have a limited liability, which means that they have a risk of unlimited liabilities this could be in circumstances of the sole trader being force to sell their own personal goods/assets to cover any debts the business has accumulated. The expansions and Development of the business is limited by the amount of capital available. Privately owned family business Shares can only be sold with the agreement of the other shareholders, which are family members who may disagree due to emotional conflict. Shares which are made within the family business are cannot be sold to members of the public. Due to their internal structure of the business this can cause more formalities to arise. There are Larger overhead costs of running the company. What would be the advantages and disadvantages of forming a partnership with a fairly rich friend of mine who is interested in joining the business? How should we go about legally forming a partnership? Partnerships and limited liability partnerships are two types of ownership. Partnerships are businesses owned by two or more people. A Limited Liability Partnership or LLP is a relatively new creation that operates like a limited partnership, but allows the members of the LLP to take an active role in the business of the partnership, without exposing them to personal liability for others' acts except to the extent of their investment in the LLP. A contract called a deed of partnership is normally drawn up. ...read more.

Conclusion

Private limited company A Registered company has limited liability which indicates that the shareholders cannot lose more than their original shareholdings (input into the business), a private limited company has a minimum of two shareholders and a maximum of fifty. It cannot offer its shares or debentures (debtors) to the public and their transfer is restricted. A private limited company is treated as a legal entity Public limited company A Company that is registered as a plc is under the provisions of the Companies Act 1980. The company's name must carry the words 'public limited company' or initials 'plc' and must have authorized share capital over �50,000, with �12,500 paid up - paid to the company by the shareholders. Public limited companies may offer shares to the public and are more regulated than limited companies. Benefits of a limited company Benefit of trading via a limited company has always been the limited liability imparted upon the company's officers and shareholders Shareholder's personal assets are not at risk in the event of a winding up or receivership. Shareholders can not lose their original shareholdings within the business There is no obligation for a limited company to commence trading within any set time period after its incorporation. Problems of a limited company Disagreement amongst existing shareholders this could cause the business to fail in terms of profit Difficulty of finding suitable shareholders. Loss of control by existing shareholders. Lack of collateral and security for those lending funds Element of risk in the loan. Starting up a limited company To set up as a limited company in the UK, yourself or an agent acting for you will need to send several documents and completed forms to Companies House (or, in Northern Ireland, to the Companies Registry for Northern Ireland): * A Memorandum of Association, giving details of the company's name, location and what it will do. * Articles of Association, describing how the company will be run, the rights of the shareholders and the powers of the company's directors. * Statement of the First Directors, Secretary and Registered office. ...read more.

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