P4 + M3 Legal 5.1 Sole trader A sole trader is a person who is self-employed person; this means that someone who sets up their own business. They are allowed to employ other people however they will be the only owner. A sole trader is someone who maintained and controlled the business by one person who will take full responsibility of the business such as the business decisions, the profits and many other factors. Advantages of a sole trader: • Owner can control the spending • Owner can make his own decisions. • Owner has full control of the business.
C. Profits are not taxed as the personal income of the sole proprietor. D. A sole proprietor is personally liable for obligations of the business. 3) Which of the following is a type of ADR? A. Consultation B. Mediation C. Case argument D. Case analysis 4) Which of the following is an extension of negotiation?
The aggregate concept treats partnerships more align with an individual. Each partnership is viewed as an aggregation of each partner’s separate interest in the assets and liabilities of the partnership. For example, each partner is proportioned and taxed on a certain amount of income the partnership creates. The partnership, as a whole, is never taxed. The entity concept treats partnerships more align with a corporation.
Advantages and disadvantages are generally the same as a proprietorship. A major disadvantage is that a partner may be held responsible for the business debts even if the other partner is bankrupt. To avoid this there are limited partnerships where in certain partners are designated general partners and others limited partners. There are also limited liability partnerships. A corporation is a legal entity created under state laws, and it is separate and distinct from its owners and managers.
Friedman says that there is only one social responsibility for the business: to use its resources in order to increase its profits as long as the business stats within the rules that are assigned. Freeman claims that management serving only the interest of stockholders is already significantly restricted by laws and economic logic. Freeman argues that the owners’ claim on a company is worth the same as employees’, suppliers’, customers’ and the local community’s claims. All stakeholders maintain a reciprocal relationship of rendering and receiving resources to and from the corporation. Managers must act as balance-maintainers of stakeholder interests to guarantee the sheer existence of the corporation and not out of altruistic reasons.
Dawn, Lind, and Mike forming their business relationship under the label Colored Custom Sheets, CCS will encounter several issues regarding both tax and nontax issues which may differ across entity types. For example, when considering tax issues across entity types, if Dawn, Lind, and Mike elect to select the limited liability company, they will need to understand that by default all profit and loses are passed though the business to its owners. The owners are also required to report income and losses on their personal tax returns when selecting the limited liability company structure. This also holds truth for sole proprietor or partnerships. The taxation is considered to be the simplest form and can be filed for a variety of different classifications of tax on form 8832.
The Influence Different Stakeholders Exert on an Organisation In the business environment there are many factors which influence the business to adapt to different conditions which the stakeholders put onto them. British Telecommunications is an organisation which is privately ran however, it is a public limited company which means it is owned through shares and stocks which can give mixed emotion around how the business should be ran with conflicting views on this. This issue constantly needs to be resolved with every change the managing team will make on the business. Within an organisation of such size as BT PLC it is common that there is mixed emotions on how the company should be ran as well as future changes which the business may undertake. British Telecommunications try to achieve this goal - “The overall outcome is that BT’s stakeholders are reassured, BT’s reputation is enhanced, customers respond favorably, and business continues to grow.” To achieve this BT have a use of debates between stakeholders to find the option which best favors everyone in connection with the change 1.
* Private – A business that is part of the economy, sometimes referred to as the citizen sector which is run by private individuals or groups, usually as a means of enterprise for profit and is not controlled by the state. This includes every business run by anyone other than the government, from small businesses to multinational corporations. Private businesses are not owned by the government but by shareholders (other people). Profitability is for the private business. * Not-for-profit/Voluntary – Charity Sectors of business activity * Primary sector – Primary sector are the organisations which are involved in
The expenses used to figure the cost of goods sold, capital expenses, and personal expenses are not considered business expenses and should be separated. The types of expenses that go into figuring the cost of goods sold are the cost of products or raw materials, including freight, storage, direct labor costs (including contributions to pensions or annuity plans) for workers who produce the products, and factory overhead Capital expenses are considered assets in your business. In general, there are three types of costs you capitalize which are Business start-up cost, business assets and improvements. Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts.
If an employer is able to classify its worker as an independent contractor rather than an employee they would not have to worry about withholding federal income tax, FICA taxes, FUTA taxes, and state income taxes. Instead this burden would fall upon the independent contractor when tax season comes around. There are non-tax benefits for the business in choosing to classify a worker as an independent contractor as well. Employers do not have to worry about paying into workers’ compensation plans for independent contractors, they do not have to pay health or welfare benefits, pay into pension plans, or reimburse business expenses. With all of those pros to classifying a worker as an independent contractor you have to wonder why businesses choose not to.