Identify the purpose of different types of organisation giving examples Sole trader
A sole trader is someone some who starts up their own business, as a sole trader, your business is owned entirely by you, its grown by you ultimately succeed or fails by you. Furthermore this means that you are entitled to all the profit the company makes. If you have a llook through the Yellow Pages or a local free business listing posted through your letterbox and you will see lots of examples of people operating as a sole trader in your area. Many traders in the service sector (e.g. hairdressers, gardeners, plumbers and electricians) use the sole trader option, as do people who run part-time or seasonal businesses. http://www.tutor2u.net/blog/index.php/business-studies/comments/qa-what-is-a-sole-trader Becoming a sole trader could potentially take a lot of your time and money, here’s a list of advantages and disadvantage Advantage
Control - Sole traders maintain full control of their business. Running it how they please without the interference of others. Profit retention – Sole traders retain all the profits of their business. Private data – Information about sole traders is kept private, unlike that of limited companies which is necessarily made public after registration with Companies House. Specialist – Often a small business, sole traders can offer a more personal service with local roots and ties. This can be more appealing to potential customers in the local community. Personal – Because there is no need to confer with other decision makers, sole traders can make decisions quickly and act on them swiftly, providing for the needs of their customers. - See more at: Disadvantage
Liability – sole traders are not seen as a separate entity by the law. Therefore, they are subject to unlimited liability. This means if the business gets into debt, the business owner is liable. In the worst case, this may mean a person risks their home, personal savings and any other assets they have both in and outside of the business. Finance – sole traders often find it difficult to raise finance to fund their business. They may struggle with expansion in the future. Reverse economies of scale – sole traders will be unable to take advantage of economies of scale in the same way as limited companies and larger corporations, who can afford to buy in bulk. This might mean that they have to charge higher prices for their products or services in order to cover the costs. Decision making – all decisions must be made by the sole trader. There is no room for help by others. So the success or failure of the business rests on one person - See more at: http://blog.thecompanywarehouse.co.uk/2010/05/24/advantages-and-disadvantages-of-a-sole-trader/#sthash.Z7hLF5qk.dpuf
For a business to be called a partnership you will need two or more person who join to carry on a trade or business, for it to become a fair partnership each person whill contribute money, property,labour or skills and they are expected to share the profits or losses furthermore in some business some partners don’t hold the same shares, so may they own 60% of the company on the other hand the other partner owns 40 this is mainly due to who invested the most money. Advantages of Partnership
* Capital – Due to the nature of the business, the partners will fund the business with start up capital. This means that the more partners there are, the more money they can put into the business, which will allow better flexibility and more potential for growth. It also means more potential profit, which will be equally shared between the partners. * Flexibility – A partnership is generally easier to form, manage and run. They are less strictly regulated than companies, in terms of the laws governing the formation and because the partners have the only say in the way the business is run (without interference by shareholders) they are far more flexible in...
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