Flashcards
Flash Cards: Types of Business & Setting Up A Business
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What are the two forms a business can be run?
What are the two forms a business can be run?
1. Incorporated business – must undergo formal registration process before they can legally exist. They have a separate legal entity from that of their owners. Established under the Company Act 2006 (CA).
2. Unincorporated business – require few, or even no, administrative steps to be taken to be formed under the law. Usually treated as being the same legal entity as its owners, which no separate legal status.
What is the liability of an LLP?
What is the liability of an LLP?
• It has a sperate legal personality distinct from its owners like a company, and it offers its owners the protection from liability, the same as a limited company.
• However, the LLP is run with the informality and flexibility afforded by a partnership.
• Management structure defined in partnership agreement.
Advantages and disadvantages of a sole trader?
Advantages and disadvantages of a sole trader?
Advantages:
1. very easy to form,
2. freedom to run as owner sees fit,
3. sole decision-maker,
4. all profits belong to owner.
Disadvantages:
1. unlimited liability for business debts,
2. lacks status of incorporated forms,
3. no day-to-day support for owner.
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