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Questions and Answers
What defines a sole trader?
What defines a sole trader?
What is one key advantage of partnerships?
What is one key advantage of partnerships?
Which of the following is true about partnerships?
Which of the following is true about partnerships?
What is a disadvantage of a partnership?
What is a disadvantage of a partnership?
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Which statement correctly differentiates between incorporated and unincorporated businesses?
Which statement correctly differentiates between incorporated and unincorporated businesses?
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What is one main feature of a sole trader business structure?
What is one main feature of a sole trader business structure?
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Which of the following statements is true about partnerships?
Which of the following statements is true about partnerships?
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What is a disadvantage of being a sole trader?
What is a disadvantage of being a sole trader?
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In the case study of Mariana Bello, what method did she use to finance her business?
In the case study of Mariana Bello, what method did she use to finance her business?
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What risk does a sole trader face that a limited liability company does not?
What risk does a sole trader face that a limited liability company does not?
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Which of the following terms describes a business with separate legal identity from its owners?
Which of the following terms describes a business with separate legal identity from its owners?
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Which of the following is NOT a feature of partnerships?
Which of the following is NOT a feature of partnerships?
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What does the term 'unlimited liability' mean for the business owner?
What does the term 'unlimited liability' mean for the business owner?
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Study Notes
Business Ownership
- Sole Traders are businesses owned and controlled by one person.
- Partnerships involve 2 to 20 people who own a business together and share responsibility and profits.
- Deed of Partnership is a document that partners may choose to create outlining their responsibilities and rights.
Business Structures
- Incorporated Businesses have a separate legal identity from their owners, allowing them to sue and be sued, be taken over, or liquidated independently.
- Unincorporated Businesses have no legal distinction between the owner and the business.
Sole Trader Features
- Unlimited Liability: the owner is personally responsible for all business debts.
- Easy Setup: No legal formalities required.
- Full Control: Owner makes all decisions.
Partnership Features
- Unlimited Liability: Partners are personally responsible for all business debts.
- Shared Responsibility: Partners share the workload and decision-making.
- Shared Profits: Profits are divided among the partners.
Advantages of Partnerships
- Easy Setup: No complex legal processes are required.
- Specialization: Partners can focus on their areas of expertise.
- Shared Task: The workload is distributed among more people.
- More Capital: More people contribute financially, providing more resources.
Disadvantages of Partnerships
- Unlimited Liability: Partners are personally responsible for business debts.
- Shared Profits: Partners must share profits, potentially leading to disagreements.
- Binding Decisions: One partner's decision legally binds all others.
- Limited Size: Partnerships often remain smaller than incorporated businesses as they rely on a limited number of partners.
- Transparency: Partnerships are less transparent than corporations in terms of financial information.
Risk in Business Ownership
- Both Mariana Bello and the Hatta Dental and Implant Clinic took the risk of investing their own money and relying on loans.
- Mariana Bello took the risk of targeting a specific market (health conscious customers).
- Hatta Dental and Implant Clinic took the risk of hiring additional staff, expanding their services, and specializing in different areas.
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Description
Explore the different forms of business ownership including sole traders and partnerships. Understand the features, responsibilities, and legal distinctions of incorporated and unincorporated businesses. This quiz will enhance your knowledge of how businesses operate and their legal implications.
