Sole Trader

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Btec Business AssignmentIntroductionSole-TraderA Sole-Trader is a

business organisation.

Btec Business Assignment

Introduction

Sole-Trader

A Sole-Trader is a business organisation which is owned and managed by

one person. Implied in this is that ownership is under one person and

this individual could employ a lot of people to work for him.

One key feature of a sole trader is that of limited liability. A

limited liability refers to the situation whereby he or she looses

both the invested capital and private property when the business winds

up. Advantages for a sole trader are that profits would not have to be

shared and decision making would be easy because the sole trader would

not have to consult anyone in decision making.

For a sole trader things would be slightly easy in the sense that

there would be less confusion as everything would go by the way the

individual wants the business to be. It is also a big responsibility

as there would be a need to have a high-level of personal interest and

if the individual does not show this, then it could be a big factor as

to why the business could go bust.

Partnership

A partnership is a type of business organisation which is owned and

managed by two or more people, usually not any more then 20 people.

The key feature of this type of business is that of profit sharing.

This brings me onto the Partnership Act 1890 which outlines the main

rules of a business in partnership:

* Profits and losses to be shared equally

* No interest on capital

* Equal amount of capital contribution

The deed of partnerships outlines the rights, responsibilities and

duties of partners. Like a contract.

This contract would consist of such things as the name of the

business, the location, the ration of profit sharing and the times

which each partner has to put into the business. It would also contain

the amount of money etc which would be needed to be contributed by

each partner.

Private limited company

A private limited company specialises mainly in expanding business

growth, these companies are often much larger than a partnership

organization and consist of influencing globalisation.

Private limited company is an organization whereas any one can own it

if they obtain the majority of shares off the company they trade there

stock to in the stock market.

Dependant up...

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...vings

Lastly u have you’re own Personal savings which could be used as a

source of finance for the business. This is superior as there would

not be any need for negotiating as you would have to when applying for

a loan etc.

Ultimately, there are two main sources of finance which is divided

into two key elements; these two figures are internal sources and

External sources.

Internal sources are as already mentioned, divided into 4 main

categories which are personal savings, retained profit, working

capital and the sale of assets.

The sale of assets could be anything that needs to be sold for the

business to carry on. These are normally the fixed assets such as;

land, buildings, fixtures and fittings, machinery and vehicles etc.

Businesses normally tend to sell their fixed assets when they are in

great desperation of cash, because of this, a lot of organisations

decide to stop offering certain products so more money is saved, and

at the same time sell their fixed assets. There is one disadvantage in

this and this could be that by selling fixed assets they could reduce

the amount of product which may be produced or could be used in the

working environment.

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