Engels mondeling
Business Backgrounds
1. Types of business organization in Britain and in the USA (1)
The differences center round the following questions:
- Who actually owns the business?
- Who controls it?
- What financial risk do the owners take?
- What possibilities are available for raising capital?
- How are profits distributed?
- What are the legal obligations in the event of bankruptcy?
1.1. The one-man business
USA = sole proprietorship
One owner:
- Controls and manages the business
- Responsible for providing the capital and managerial skill
- Takes all the risks
- Takes all the after-tax profits
o The business itself doesn’t pay taxes but the owner must pay income tax to the
Inland Revenue
Advantages:
- He can make rapid decisions because there is no Board of Directors to consult
- His personal supervision ensures effective operation
Danger:
- The owner may lack essential expertise
- He must be his own buyer, sales manager and accountant all in one.
Disadvantage:
- He is personally unlimited liable for all debts of the business
- It may be difficult to borrow large sums of money from banks
1.2. The partnership
Generally known as firm.
The access to funds can be improved by forming a partnership. Partners own all the assets and debts,
make all the decisions and share the profit.
1
Business Backgrounds
1. Types of business organization in Britain and in the USA (1)
The differences center round the following questions:
- Who actually owns the business?
- Who controls it?
- What financial risk do the owners take?
- What possibilities are available for raising capital?
- How are profits distributed?
- What are the legal obligations in the event of bankruptcy?
1.1. The one-man business
USA = sole proprietorship
One owner:
- Controls and manages the business
- Responsible for providing the capital and managerial skill
- Takes all the risks
- Takes all the after-tax profits
o The business itself doesn’t pay taxes but the owner must pay income tax to the
Inland Revenue
Advantages:
- He can make rapid decisions because there is no Board of Directors to consult
- His personal supervision ensures effective operation
Danger:
- The owner may lack essential expertise
- He must be his own buyer, sales manager and accountant all in one.
Disadvantage:
- He is personally unlimited liable for all debts of the business
- It may be difficult to borrow large sums of money from banks
1.2. The partnership
Generally known as firm.
The access to funds can be improved by forming a partnership. Partners own all the assets and debts,
make all the decisions and share the profit.
1
