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Different Types of Finance and Business Ownership

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Introduction

Part A Research the small business opportunity: Name: Outback’s Jacks Bar & Grill Location: Whitford city shopping centre near Hillarys boat harbour Type of business: Bar& bistro sort of restaurant Type of business ownership: sole trader Name: Gloria & jean coffees Location: Liverpool NSW Type of business: café Type of business ownership: franchise. 1. Sources of finance available to a investor to start a business: Loan from a family member or a friend: A prospective business owner may be able to borrow money from other family members or from a friend. The length of the loan, the interest rate, if any, to be paid on the loan and any other terms of the loan must be negotiated between both parties. P.15 Doyle Credit card: A credit card can be used as a short-term source of finance for a business. A short term source of finance is a loan that should be paid back within a period of a few months p15 Doyle Bank overdraft: Is a loan made by a bank in which the customer can withdraw more money from his or her bank account than has been deposited in the account. Pg. 15 Doyle Term loan from a bank: A term loan is a source of finance obtained from a bank. ...read more.

Middle

Advantages of a sole trader -You don?t need to share profits amongst others. -There won?t be a clash of ideas and you can put the ideas you want in to the business A business operated by a sole trader is easier and less expensive to establish than a company. Disadvantages of a sole trader -A sole trader is liable to all of the debts that the business have, if the business property doesn?t cover cant cover the debts then the sole trader is has to pay these debts off with their personal property such as their house. -One person may not have enough money to start or expand a business -A sole trader has limited sources of advice when making business decisions -The business may have to be closed or be sold if the sole trader has a serious illness -Any losses made cannot be shared with other owners -It would be hard for the sole trader to have to take annual holidays unless if he has family members who have the necessary skills to run the business. 4. Identification of the GST requirements for the chosen business: A business that has the annual sales of 75000 or more must registerer with the Australian taxation office to collect GST and must charge GST on the products that it sells unless these products are free from GST. ...read more.

Conclusion

of helping you while earning interest on their spare cash Creditor funding Many businesses use their trade creditors to finance their business activities . Put simply, this means that you buy something, sell it at a profit, and then pay your suppliers with income from the sale. Bank loans Banks want to make loans to businesses, which are solvent and profitable. They are generally risk averse, and consider lending to one-person operations or new businesses without solid track records as high risk. Grants Government assistance for small business can take many forms, most commonly by way of free or low cost advisory services, information, and guidance. 7.Factors that could affect weather or not Taylor?s application is approved or not Equity: They will see your assets and see if they are probable for future economic benefits they will see cash at bank, and land and building and other assets etc. They will also see your liabilities like the loans from the banks and how much you owe them and the interest rate accounts payable or creditors, GST payable, bills and bank overdrafts, Business plan: If his business look promising enough that he will be able to pay back the loan, what part of the economy they aim to target, the quality of the business plan, .the collateral available to secure the loan, the capacity of the business to repay the loan ...read more.

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