Sole Proprietorship and Partnership PDF

THE MAIN TYPES OF BUSINESS OWNERSHIP SOLE TRADERS AND PARTNERSHIPS Learning objectives: Understand the features of sole traders and partnerships Understand and explain the advantages and disadvantages of sole traders, partnerships To compare and contrast sole proprietorshi...

THE MAIN TYPES OF BUSINESS OWNERSHIP SOLE TRADERS AND PARTNERSHIPS Learning objectives: Understand the features of sole traders and partnerships Understand and explain the advantages and disadvantages of sole traders, partnerships To compare and contrast sole proprietorship with  Entrepreneur Unincorporated Key Incorporated Unlimited liability terms Sole trader Partnership Deed of partnership Limited partnership  Limited liability: This means that the business owner is only liable for the Key term original amount of money invested in the business. Getting started  does the term sole trader CASE STUDY: MARIANA BELLO Mariana Bello owns a cafe in Seville, Spain, which she calls Mariana’s. She set up the business in 2012 using €20000 of her own savings and a €10000 bank loan. After a slow start, the business picked up when she began to target health conscious customers. She developed a range of drinks from freshly sourced fruit and vegetables and used organic ingredients to make homemade CASE STUDY: the hatta dental and implant clinic The dental practice was established in 1997 by experienced dentists Khalid Said and Ismail Mansour in Dubai, UAE. The practice employs seven other people including dental hygienists and administrative staff. It carries out a range of dental work including cosmetic dentistry, such as replacing missing teeth and repairing badly damaged teeth. Khalid specialises in dental implants while Ismail is responsible for a range of routine dental work. When the clinic was set up, both 1.Who owns the businesses in the above two case studies? 2. Outline one advantage and disadvantage each of owning a business with a partner. 3. Business owners have to take risks. What risk are taken in the above case studies? Businesses vary according to the legal forms they take. Incorporated: this is a Unincorporated: These business that has a are businesses where separate legal identity there is no legal from that of its distinction between owners. This means the owner and the that this business can business. These sue and be sued, taken businesses tend to be over or liquidated. small and owned by one Incorporated businesses person, or a small group are often called limited A sole trader is a business organization owned and controlled by one person. Sole traders can employ other workers, but only he/she invests and owns the business. Give examples: They are also called sole proprietors.  What is a partnership? A partnership exists when between 2 and 20 people own a business together. The owners will share responsibility for running the business. They also share the profits. Professions such as accountants, doctors, estate agents and solicitors are often partnerships. Mini Plenary Discuss one difference between: a) An incorporated business and unincorporated business b) A sole trader and partnership There are no legal formalities to complete when a partnership is formed. However, partners may produce a deed of partnership. Advantages of partnerships Disadvantages of partnerships Easy to set and run; no legal Partners have unlimited formalities liability Partners can specialize in their Profit has to be shared area of expertise Any partners’ decision is The job of running the business is legally binding on all shared More capital can be shared with Partnerships still tend to be more owners small. Financial information is not shared PLENARY List three things you have learned about sole traders and partnerships.