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M1 Analyse why a sole trader might want to become a partnership.
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Complete with all the information about partnerships and sole traders and how a sole trader might wan to become a partnership.
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M1 Analyse why a sole trader might want to become a partnership.Explain what a sole trader is
The advantages and disadvantages of a sole trader
Explain what a partnership is
The advantages and disadvantages of a partnership
A sole trader is an organisation which is only owned and managed by one
person. One of the key features of a sole trader is that of limited liability. Limited
liability refers to the situation whereby he or she loses both the invested capital
and private property when the business does downhill. These are the most vastly
used business structures in the common market; they're typically found in the
economic area which includes the manufacturing sector, the retail industry and
also the service sector. These businesses tend to work alone, but some
companies decide that they want to employ people which they can do work that
they don't want to do. One of the advantages of being a sole trader is that it
takes a small amount of initial to start-up capital, to get the business running.
One more advantage is that if your idea is not 100 % effective then you only
have to worry about your live hood and not about any other employees.
Furthermore, the main advantage to being a sole trader is that you have
complete control, which in the long run is good because you won't have to
accommodate anyone else's expectations of how the business should run and
what improvements should be made to ensure the business run smoothly. One
of the many disadvantages for a private limited company is that it could be
challenging to find suitable shareholders and also could be disagreement
between existing shareholders. A Limited liability company, also known as an
(LLC) is a type of business ownership combining several features of corporation
and partnership structures. Also, there is a disadvantage of small business start-
up costs which limits the amount of capital that is available for expansion which
in the specific market that the sole trader has set up his/her business in. For
example, if he/she is to expand, they will need to compete with the facilities that
they can offer to future employees, which would include comprehensive training.
A partnership business means any business which is owned by two or more
people who are agreed to share all the gains losses profits and benefits; this kind
of company is called a partnership. In a partnership the laws don't share
between the owners and their business company partners should have a legal
agreement which will be made, how the profits will share among the partners
when they face a problem there should be an agreement which includes how the
issues will be resolved, and how the future partners will be added into the
partnership, how partners can be taken out of the partnership, or what actions
will be taken to close the partnership when needed. They must also have an
agreement on how much capital and time each will contribute to the company by
each partner. When there are losses and profits should be divided by an agreed
percentage by the partners. An advantage of a partnership is the flexibility that
comes with. Collaboration is generally easier to form, manage and run. They are
less strictly regulated than other companies, in terms of the laws governing the
formation and because the partners have an only say in the way the business is
run (without interruption from any of the shareholders) they are more flexible in
terms of management, as long as the partners agree. A disadvantage of a
partnership is the disagreements that may occur. One of the most prominent
disadvantages of a partnership is the danger of disputes between the partners.
Of course, people are likely to have different ideas and views con how the
business should be run, who should be doing what and what the best interests of
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