Solo Trader: Solo trader is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business. These types of businesses are mostly small and local. Advantages: Quick decision making: A sole trader enjoys the freedom in making business decisions. The decision making is quick because there is no need to agree with anyone. This may lead to timely capitalisation of market opportunities as and when they rise.
• Owner has full control of the business. Disadvantages of a sole trader: • All decisions you need to make • Capital is limited • It is hard to employ people • Partnership A partnership is an organisation where two or more people get their money, skills and other resources together and then share any profit or loss created in accordance with terms of the partnership agreement. Advantages of running a partnership • Businesses doesn’t have to pay income tax • Partners can share responsibilities. • Partners can also share decisions Disadvantages of running a partnership • Disagreement • Taxation • Profit sharing Limited Company A limited company is an organisation which can be set up to run your organisation, the limited company is then responsible in its own right for everything which they contribute in and their finances are spate to your personal finances. Any profit that is produced will be owned by the company after it pays Corporation Tax, this will then allow the company to share its profits.
If they go bankrupt, or fail to make money off their property, the government, or the bank, will not help out. Finally, private property rights were exercised in this game over and over. One example is that you can do what you want with your property and the house or hotels that are on it.
Advantage: Understand that sole proprietors don't have to answer to a board, partner or group of investors. They can make the decisions, both large and small, without anyone else's input. Disadvantage: Take on all liability and debt responsibility for the
Exports – if you sell something to someone outside the au then no VAT is liable you can put this down as zero rated. Accounting for VAT Normally with VAT it is accounted for on the basis of invoices issued and received in a return period, however there is a few different schemes that can help a business with VAT, Cash Accounting – cash accounting is when you only pay the vat when your customer has paid you, therefore if the customer does not pay you, you do not suffer the charge of VAT as long as you continue to use the cash accounting scheme. You can only opt into this scheme if your taxable turnover is less than £1.35million. The disadvantage of this is when you leave the cash accounting scheme you will have to account for all outstanding VAT including bad debts. Accruals Accounting – accrual accounting is when you claim your output tax even though the customer has not yet paid and the input tax claimed even if you have not paid your supplier, this can however cause cash flow problems for businesses as if a customer disputes the VAT on the invoice and you have already paid this, you could suffer the loss for
General partners are owners (partners) who have unlimited liability and are active in managing the company. Limited partners are owners (partners) who have limited liability and are not active in the company. • What does unlimited liability mean? Unlimited liability means that sole proprietors and general partners must pay all debts and damages caused by their business. They may have to sell their houses, cars, or other personal possessions to pay business debts.
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.
There are also hybrid forms which are limited partnership, the limited liability partnership, the professional corporation, and the s corporation. The advantages of a proprietorship are: it is easily and inexpensively formed, it is subject to few government regulations, and the business pays no corporate income taxes. The disadvantages are: it is difficult for it to obtain large sums of capital, the proprietor has unlimited personal liability for the business debts, and the life of the business organized is limited to the life of the individual who created it. The major advantage of a partnership is its low cost and ease of formation. The disadvantages are: unlimited liability, limited life of the organization, difficulty of transferring ownership, and difficulty of raising large amounts of capital.
Personal saving will benefit the businesses within the long term run as it will allow the owner it not rely on loans and interest from banks and friends. This will also allow the business to not be in debt from other external sources of finance such as banks, friends and family. An advantage of personal saving is that it is unlimited, this means that the more money you have the more you can spend to improve the business. Another advantage is that there is no interest so this means that you don’t have to pay back anything or be in debt. Finally the benefit of personal savings is that you are in control of where your money goes and how it is spent.
In competition based pricing it is easy for your competitors to match whatever prices you may set. The biggest advantage to competition based pricing I that you are in tune with