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Questions and Answers
Which type of business structure has unlimited liability for the debts of the business?
Which type of business structure has unlimited liability for the debts of the business?
- Private limited company
- Partnership
- Sole trader (correct)
- Public limited company
What is a disadvantage of partnerships?
What is a disadvantage of partnerships?
- High setup costs
- Shared ownership
- Limited liability (correct)
- Lack of control
Which type of business structure offers more protection and benefits for the owners?
Which type of business structure offers more protection and benefits for the owners?
- Partnership
- Private limited company (correct)
- Sole trader
- Public limited company
What is the main advantage of being a sole trader?
What is the main advantage of being a sole trader?
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What is the purpose of a partnership agreement?
What is the purpose of a partnership agreement?
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Study Notes
Business Structures
- A sole trader has unlimited liability for the debts of the business.
Disadvantages of Partnerships
- One of the disadvantages of partnerships is the unlimited liability for the debts of the business.
Business Structure Benefits
- A limited liability company (LLC) offers more protection and benefits for the owners.
Sole Trader Advantages
- The main advantage of being a sole trader is the simplicity and ease of setting up and running the business.
Partnership Agreement
- The purpose of a partnership agreement is to outline the terms and conditions of the partnership, including the roles and responsibilities of each partner, profit sharing, and decision-making processes.
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