school business case study

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Four favourite ideas

Internet Café

Game station

Tuition classes

DVD rental shop

Final idea

Game station

I have chosen to have a Game station because I have lots of games and I know a lot about them. Also my uncle has a game shop so I can get ideas of him.

Task 2- Legal forms

(1) Sole Trader

A person who runs the business on his own also gets to keep prophet of business. Sole traders are normally small businesses, and by becoming a sole trader you risk lots of things, which makes you unlimitedly liable this means if your business is not going well the government can take away almost everything from you; your house, your car etc, all your goods and valuable things and invaluable, the owner has to pay for any losses made by the business. For example if you made a loss of say £5000 you would have to find someway of paying back this may mean selling your house your car anything. A sole trader runs an unincorporated business on his/her own. Sole traders are also otherwise known as sole proprietors. Sole traders are easy to set up. They can set up a business immediately.

The sole trader structure is the most straightforward option. The individual is taxed under the Inland Revenue's Self-Assessment system, with income tax calculated after deduction for legitimate business expenses and personal allowances. A sole trader is personally liable for the debts of the business, but also owns all the profits.

(2) Partnership

a partnership is an association of two or more people formed for the purpose of carrying on a business. Partnerships are governed by the Partnership. Unlike an incorporated company, a partnership does not have a "legal personality" of its own. Therefore the Partners are liable for any debts of the business.

Partner liability can take several forms. General Partners (the usual situation) are fully liable for business debts. Limited Partners are limited to the amount of investment they have made in the Partnership. Nominal Partners also sometimes exist. These are people who allow their names top be used for the benefit of the partnership, usually for remuneration, but they do not get a share of the partnership profits.

A "Partnership Agreement" usually governs the operation of a partnership. The specific terms of this agreement are determined by the partners themselves, covering issues such as:

- Profit sharing - normally, partners share equally in the profits;

- Entitlement to receive salaries and other benefits in kind (e.g. cars, health insurance)

- Interest on capital (the amount invested in the partnership)

- Arrangements for the introduction of new partners

- Arrangements for retiring partners

- What happens when the partnership is dissolved

(3) Incorporated Company

incorporating business activities into a company confers life on the business as a "separate legal person". Profits and losses are the companies and it has its own debts and obligations. The company continues despite the resignation, death or bankruptcy of management or shareholders. A company also offers the best vehicle for expansion and the provision of outside investors.

There are four main types of company:

(1) Private company limited by shares - members' liability is limited to the amount unpaid on shares they hold

(2) Private company limited by guarantee - members' liability is limited to the amount they have agreed to contribute to the company's assets if it is wound up.

(3) Private unlimited company - there is no limit to the members' liability

(4) Public limited company (PLC) - the company's shares may be offered for sale to the general public and members' liability is limited to the amount unpaid on shares held by them.

Specific arrangements are required for public limited companies. The company must have a name ending with the initials "plc" and have an authorised share capital of at least £50,000 of which at least £12,5000 must be paid up. The company's "Memorandum of Association" must comply with the format in Table F of the Companies Regulations. The company may offer shares and securities to the public. In return for this right to issue shares publicly, a public limited company is subject to much stricter regulation, particularly in relation to the publication of financial information.

The vast majority of companies incorporated in the UK and in other major industrialised countries are private companies limited by shares - "private limited liability companies".

My Decision

I have decided to make my business a partnership because a business will be much easier there will be more ideas. The law says a partnership can be between 2 to 20 partners and as they say 2 heads are better than 1,partners are joint owners of a business, the downside to this is you are unlimitedly liable but the upside is there's always more than 1 person that is liable to pay off the debts. I will also have a deed of partnership. This tells us who the partners are, how much money each partner gets, how the profit should be shared, how many votes a partner gets in a partnership meeting, and what happens if any of the partners want to withdraw from the business or if new partners want to be brought in.
Join now!

I chose partnership because like a sole trader it is easy to set up. They don't have to employ solicitors or accountants to help run a business. All profits belong to partners; I will keep my partnership small so there aren't too many problems between each other. Two people can normally raise more money to start or expand a business than one. Also if we get extra partners willing to invest money in the business is a way of financial expansion. Equally new partners can add expertise to the business. Some partners also have sleeping partners, these are ...

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