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Business Legal Structures

Uploaded by Jd-Lodzy22 on Apr 04, 2008

There are many different businesses out there in the big old world, from fast-food outlets to solicitors. The similarity that businesses can share even if there as complete opposite as a fast-food outlet to a solicitor is the way they have there legal structure. To create a successful business dependent on the type of work, four different legal structures can help succeed in what you desire.

SOLE TRADER – A sole trader is the simplest legal business structure and consists of just one individual trader. This owner can control the business that how they please. Their desires toward the business are final and there working hours are chosen by the individual worker. A sole trader basically means an individual does business in there name and they are the only owner of the business. This legal structure is not a corporation.

Castle Hill Music is an example of a sole trader. There many not be the most successful business mostly due to the location. The have a wide range of instrument and music books. Unfortunately not large.

Advantages – There are many advantages in being a sole trader that could benefit your business if sole trader is your chosen legal business structure.
• Sole traders has the simplest form of starting a business
• The owner has complete control or how the business runs
• It is less costly to operate
• Owner keeps all profit
• No tax on profits only personal income

Disadvantages – Where there are advantages, disadvantages are also patiently waiting to strike.
• Unlimited liability for business debts
• Difficult to operate in illness
• Carries all loses of the business
• Needs to perform a variety of tasks
• Difficulty in raising finance for expansion.

PARTNERSHIP – A partnership for possible financial troubles is the safest option in establishing a business. This legal structure is shared between partners who own the business. They experience profit and loss of which the business has invested upon. Partnerships are preferred over corporations for financial purposes. The decision decided are both consulted through the owners of the business before the idea is taken into consideration of the business.

Lim’s Hot Bread owned by Yen and Hay Lim is located at Eastwood. This business uses the partnership structure. Furthermore the business being a family business each owner has equal share to the profit that the business makes.

Advantages – The advantages of partnership are more limited that a sole trader:
• Shared responsibility and work load
• Pooled funds and talent
• Minimal government regulation
• No taxes on...

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Uploaded by:   Jd-Lodzy22

Date:   04/04/2008

Category:   Business

Length:   3 pages (736 words)

Views:   4610

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