Sole Traders Business Structure Quiz

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Questions and Answers

What are the three legal regulations which must be followed by a sole trader?

The owner must register with, and send annual accounts to, the Government Tax Office. The name of the business is significant. The name must be registered with the Registrar of Business Names. In some industries, the sole trader must observe laws, these include health and safety laws and obtaining a licence to sell alcohol or operate a taxi.

What are three advantages of a sole trader running their own business?

There are few legal regulations when setting up the business. You are your own boss. Having complete control over your business. They have the freedom to choose their own holidays, hours of work, prices to be charged, and who to employ.

What five main points are important to include in a partnership agreement?

The amount of capital invested in the business by each partner. The tasks to be undertaken by each partner. The way in which the profits would be shared. How long the partnership will last. Arrangements for absence, retirement and how new partners could be admitted.

What three advantages are there to a partnership over being a sole trader?

More Capital could now be invested into the business with the partner's saving as well as his own. The responsibilities of running the business were now shared. Both partners were motivated to work hard because they would both benefit from the profits. Signup and view all the answers

What three disadvantages are there to a partnership?

The partners do not have limited liability. If the business failed, then creditors could still force the partners to sell their own property to pay business debts. The business does not have a separate legal identity. If one of the partners died, then the partnership would end. Partners can disagree on business decisions and consulting all partners takes time. If one of the partners is very inefficient or actually dishonest, then the other partner could suffer by losing money in the business. Signup and view all the answers

What are three benefits of forming a private limited company?

Shares can be sold to a large number of people. The sale of shares could lead to much larger sums of capital to invest in the business than the two original partners could manage to raise themselves. All shareholders have limited liability. The people who start the company – Mike and Dave in our example – are able to keep control of it as long as they do not sell too many shares to other people. Signup and view all the answers

What are three disadvantages of forming a private limited company?

There are significant legal matters which have to be dealt with before a company can be formed. Both of these documents are intended to make sure that companies are correctly run and to reassure shareholders about the purpose and structure of the company. The accounts of a company are less secret than for either a sole trader or a partnership. Signup and view all the answers

What are two roles of a manager?

Delegation that allows employees to be primary decision makers. They give their team support, guidance, consultation, and training when it's needed, but trust them to handle the details and execution of their tasks and projects. Signup and view all the answers

What is one external cost and one external benefit that Millie's business activities might create?

The production of oil can have negative impacts on the environment and local communities such as, environmental damage, oil spills, health risks, injuries and illness. Education is an example of a positive externality. Where those who invest in it gain knowledge and production for society as a whole. Signup and view all the answers

What are two methods of IT based communication that Millie might use with its employees?

Using two-way radios (wireless intercoms) for real – time communication. These radios allow for real – time, two – way communication between workers, providing immediate feedback and coordination of tasks. Ultimately this can enhance safety and productivity. Satellite Communication for working off shore. A reliable option that can transmit data over long distances and to remove locations. It is fast and can move large amounts of voice, fax, and data. However, it can be expensive and vulnerable in bad weather. Signup and view all the answers

How might a pressure group try to influence business decisions? (Select all that apply)

Try to influence businesses to behave more ethically. (A), Use media coverage to create bad publicity for a company. (C), Encourage customers to stop buying a company's product. (D) Signup and view all the answers

What does laissez-faire mean?

Laissez-faire is French and it means "allow to do". Signup and view all the answers

What is a laissez-faire leadership style?

A leader who adopts a hands-off approach to management, allowing employees a high level of autonomy and minimal supervision. Intervention only by request or when there is a problem. Signup and view all the answers

Flashcards

Sole Trader

A business owned and operated by one person.

Government Tax Office

The government agency responsible for collecting taxes.