BUSINESS LAW: Sara Ahmed
Incorporated business: Unincorporated business:
4. Owners not personally liable for 1. Not a seperate legal entity
debts 2. Full personal liability for debts
5. Separate legal entity 3. Sole traders, (limited)
6. Most common form is limited partnerships
company
Sole Trader Partnership
o Number of persons needed for setup: only 1 person. *(Can have
employees) No separate legal entity: unable to own property or enter into contract. The
o Control and management: Sole trader has complete control = flexible individuals will sue, own property or enter into contract.
+ pressure.
o Liability: unlimited personal liability = personally liable for all debts. o Number of persons needed for setup: min 2 person.
o Expenses when setting up: no formalities/no costs. o Control and management: in accordance with parentship agreement, if
o On-going expenses: none/not really any. none, the PA 1890.
o Methods of financing: can borrow from bank/ but no floating charges o Liability: unlimited personal liability = partners personally liable for all
= no quick options. debts.
o Profits: all profits for the owner. o Expenses when setting up: no formalities/no costs, unless you want a
o Tax: owner pays income tax + capital gains tax legal agreement.
o Regulation: non o On-going expenses: none, only accountant.
o Publicity: easy to maintain privacy – not many requirements. o Methods of financing: can borrow from bank/ but no floating charges or
o May trade immediately? YES issuing shares.
o Tax: the partners are taxed separately as self-employed individuals,
paying income tax on their share of the profits of the partnership
o Regulation: non
o Publicity: easy to maintain privacy – not many requirements.
o May trade immediately? YES
Incorporated business: Unincorporated business:
4. Owners not personally liable for 1. Not a seperate legal entity
debts 2. Full personal liability for debts
5. Separate legal entity 3. Sole traders, (limited)
6. Most common form is limited partnerships
company
Sole Trader Partnership
o Number of persons needed for setup: only 1 person. *(Can have
employees) No separate legal entity: unable to own property or enter into contract. The
o Control and management: Sole trader has complete control = flexible individuals will sue, own property or enter into contract.
+ pressure.
o Liability: unlimited personal liability = personally liable for all debts. o Number of persons needed for setup: min 2 person.
o Expenses when setting up: no formalities/no costs. o Control and management: in accordance with parentship agreement, if
o On-going expenses: none/not really any. none, the PA 1890.
o Methods of financing: can borrow from bank/ but no floating charges o Liability: unlimited personal liability = partners personally liable for all
= no quick options. debts.
o Profits: all profits for the owner. o Expenses when setting up: no formalities/no costs, unless you want a
o Tax: owner pays income tax + capital gains tax legal agreement.
o Regulation: non o On-going expenses: none, only accountant.
o Publicity: easy to maintain privacy – not many requirements. o Methods of financing: can borrow from bank/ but no floating charges or
o May trade immediately? YES issuing shares.
o Tax: the partners are taxed separately as self-employed individuals,
paying income tax on their share of the profits of the partnership
o Regulation: non
o Publicity: easy to maintain privacy – not many requirements.
o May trade immediately? YES
