Y9 Business Studies: Sole Traders Quiz

Advantages:

• 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 whom to employ.
• They have close contact with their customers, the personal satisfaction of knowing their regular customers and the ability to respond quickly to their needs and demands.
• Incentive to work hard as they are able to keep all of the profits after paying tax.
• They do not have to give information about their business to anyone else – other than the Tax Office.

Disadvantages:

• They have no one to discuss business matters with as they are the sole owner.
• They are fully responsible for any debts that the business may have. They have unlimited liability which means if they cannot pay its debts, then the people they owe money to (creditors) can force them to sell all of their own possessions in order to pay them.
• If they wish to expand the business, they do not have enough money to do this. The sources of finance for a sole trader are limited to the own's saving, profits made by the business and small bank loans. Banks are often reluctant to lend large amounts to sole trades.
• If the sole trader is ill there will be no-one who will take control of the business. Sole trades cannot pass on the business to family members because when they die the business will legally not exist any longer. This is because there is no continuity of the business after the death of the owner.

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

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. Dave specialised in the accounts and administration of the business. Mike concentrated on marketing the services of the taxi firm. Both partners were motivated to work hard because they would both benefit from the profits. In addition, any losses made by the business would now be shared by the partners.

<p>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. (Both sole traders and partnerships are said to be unincorporated businesses because they do not have a separate legal identity from the owners.) 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.</p> Signup and view all the answers

<p>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. The business could therefore expand more rapidly. All shareholders have limited liability. This is important advantage. It means that if the company failed with debts owing to creditors, the shareholders could not be forced to sell their possessions to pay the debts. The shareholders could only lose their original investment. 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.</p> Signup and view all the answers

<p>There are significant legal matters which have to be dealt with before a company can be formed. In particular, two important forms or documents to be sent to the registrar of Companies. 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. Once these documents have been received by the registrar of companies, a certificate of incorporation will be issued to allow the company to start trading. The accounts of a company are less secret than for either a sole trader or a partnership. Each year the latest accounts must be sent to the Registrar of Companies and members of the public can inspect them.</p> Signup and view all the answers

<p>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.</p> Signup and view all the answers

<p>The term “laissez – faire” is French and it means “allow to do”</p> Signup and view all the answers

<p>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.</p> Signup and view all the answers

<p>External Cost: 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</p> <p>External benefit: Education is an example of a positive externality. Where those who invest in it gain knowledge and production for society as a whole.</p> Signup and view all the answers

<p>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.</p> <p>Satellite Communication for working off shore. A reliable option that can transmit data over long distances and to remote locations. It is fast and can move large amounts of voice, fax, and data. However, it can be expensive and vulnerable in bad weather.</p> Signup and view all the answers