Business Notes: Sole Traders and Partnerships

A sole trader is the simplest form of business organisation, being owned and run by a single person, although he/she may employ other people. This form of organisation has several advantages:

Total control of the business by the owner.

Easy to start up – few forms to fill in and to start trading the sole trader does not need to employ any specialist services, other than setting up a bank account and informing the tax offices.

Keep all the profit – as the owner, all the profit belongs to the sole trader.

A partnership is a business where there are two or more owners of the enterprise. The advantages of a sole trader becoming a partnership are:

Spreads the risk across more people, so if the business gets into difficulty then there are more people to share the burden of debt.

Partner may bring money and resources to the business (eg. capital).

Partner may bring new skills and ideas to the business.

The main disadvantages of turning a sole trader into a partnership are:

Have to share the profit.

Less control of the business for the original owner, who has to allow his/her new partners a say in how the business operates.

Disputes over workload.

Problems if partners argue over the direction of the business.

Esjae x

Follow me on Twitter: http://twitter.com/esjaeofficial
Creator of Esjae Official blog: http://esjaeofficial.blogspot.com/
Creator of Dear Scott Collins Blog: http://dearscottcollins.blogspot.com/
Creator of The Dangerously Dirty Truth Blog: http://thedangerouslydirtytruth.blogspot.com/
Subscribe to me of Youtube: http://www.youtube.com/theofficialesjae
Add me as a friend on Facebook: https://www.facebook.com/esjaeofficial
E-mail me: esjae-official@hotmail.co.uk

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s