Chapter 8: Starting a Business 
Chapter 10
Starting a business
Chapter 10 | Starting a business
1.
2.
3.
4.
5.
6.
Preparation
Selecting a business structure
Licences and registration
Renting or buying the premises
Franchising
Opening for business
Preparation
Chapter 10
Starting a business
Preparation
• Before a person starts trading, they should:
– do some research,
– protect the IP,
– prepare a plan,
– raise some money, and
– take out insurance.
Selecting a business structure Chapter 10
Starting a business
Business structures
• When starting a new business one of the most important legal questions a person will have to answer for themselves is which business structure they will adopt. A business structure is the legal form of a business organisation.
• The most common types of business structure are:
– the sole trader,
– the partnership , and
– the company.
• Note that these business structures are not mutually exclusive. Two or more companies, for example, can form a partnership. Business structures continued
• The person’s choice of business structure will have important consequences in terms of:
– the ease and cost of setting up the business,
– their legal and financial liability,
– the way they pay tax,
– their ability to raise finance, and
– their ongoing regulatory obligations.
Sole trader
• A person is a sole trader if they directly own and operate the business by themselves.
• A sole trader:
– may engage employees but they are the sole owner of the business,
– has sole responsibility for raising the funds to start the business, – has sole control over the operation of the business, and – is entitled to all of the profits of the business.
Sole trader continued
• The sole trader has unlimited personal liability for the debts and other legal obligations of the business.
• There are no formal legal requirements that need to be satisfied to establish this type of business structure. Partnership
• A person is a partner in a partnership if they and at least one other person
Starting a business
Chapter 10 | Starting a business
1.
2.
3.
4.
5.
6.
Preparation
Selecting a business structure
Licences and registration
Renting or buying the premises
Franchising
Opening for business
Preparation
Chapter 10
Starting a business
Preparation
• Before a person starts trading, they should:
– do some research,
– protect the IP,
– prepare a plan,
– raise some money, and
– take out insurance.
Selecting a business structure Chapter 10
Starting a business
Business structures
• When starting a new business one of the most important legal questions a person will have to answer for themselves is which business structure they will adopt. A business structure is the legal form of a business organisation.
• The most common types of business structure are:
– the sole trader,
– the partnership , and
– the company.
• Note that these business structures are not mutually exclusive. Two or more companies, for example, can form a partnership. Business structures continued
• The person’s choice of business structure will have important consequences in terms of:
– the ease and cost of setting up the business,
– their legal and financial liability,
– the way they pay tax,
– their ability to raise finance, and
– their ongoing regulatory obligations.
Sole trader
• A person is a sole trader if they directly own and operate the business by themselves.
• A sole trader:
– may engage employees but they are the sole owner of the business,
– has sole responsibility for raising the funds to start the business, – has sole control over the operation of the business, and – is entitled to all of the profits of the business.
Sole trader continued
• The sole trader has unlimited personal liability for the debts and other legal obligations of the business.
• There are no formal legal requirements that need to be satisfied to establish this type of business structure. Partnership
• A person is a partner in a partnership if they and at least one other person