Legal Structure
Specification:
1.4 Choosing the Appropriate Legal Structure for the Business • sole trader • partnership • private limited company (ltd) |
Candidates should know the benefits and
drawbacks of the different legal structures, including the appropriateness of gaining limited liability status, and the consequences of increasing the number and range of stakeholders. |
Lesson 15:
Sole Trader
Lesson Objectives:
- To understand what being a sole trader is (D-E)
- To analyse the advantages of being a sole trader (B-C)
- To analyse the disadvantages of being a sole trader (B-C)
- To understand what being a sole trader is (D-E)
- To analyse the advantages of being a sole trader (B-C)
- To analyse the disadvantages of being a sole trader (B-C)
Sole Trader | |
File Size: | 257 kb |
File Type: | ppt |
Starter: Fill in the gaps
sole_traders.docx | |
File Size: | 14 kb |
File Type: | docx |
A sole trader is a form of business that is owned and managed by one person, although they may employ other staff. It is easy to set up and you don't need to register with the government or fill in lots of forms.
Sole traders have unlimited liability. This occurs when the personal possessions of the owners of the business are at risk if there are any problems. There is no limit to the amount of money the owners may have to pay out.
Advantages of being a sole trader:
Disadvantages of being a sole trader:
- You are your own boss
- Can decide things quickly
- Easy to set up
- Keep all the profits
- Make your own decisions
Disadvantages of being a sole trader:
- Unlimited liability
- May lack finance
- Heavy workload
- May not have all the skills required
- Difficult to take a holiday
Activity: Design a poster explaining the advantages and disadvantages of being a sole trader.
Plenary: Quick quiz
Lesson 16:
Partnership
Lesson Objectives:
- To understand what a partnership is (D-E)
- To analyse the advantages of being a partnership (B-C)
- To analyse the disadvantages of being a partnership (B-C)
- To understand what a partnership is (D-E)
- To analyse the advantages of being a partnership (B-C)
- To analyse the disadvantages of being a partnership (B-C)
Partnership | |
File Size: | 401 kb |
File Type: | ppt |
Starter:
Partnerships:
A partnership is formed when two or more people set up in business together - This is under the 1890 Partnership Act. They usually have a maximum of 20 partners, although there are exceptions like solicitors, accountants and estate agents.
When a partnership is set up, it is advisable to write a legal document called a Deed of Partnership. This is an agreement that sets out the rules of the partnership, such as how profits are divided and how it will be valued if somebody wants to leave.
A partnership is formed when two or more people set up in business together - This is under the 1890 Partnership Act. They usually have a maximum of 20 partners, although there are exceptions like solicitors, accountants and estate agents.
When a partnership is set up, it is advisable to write a legal document called a Deed of Partnership. This is an agreement that sets out the rules of the partnership, such as how profits are divided and how it will be valued if somebody wants to leave.
Activity: Partnerships Worksheet
partnerships.doc | |
File Size: | 35 kb |
File Type: | doc |
Advantages of Partnerships (compared to a sole trader)
- Share workload
- More sources of finance than a sole trader
- Share skills
Disadvantages of Partnerships
- May disagree with the other partners
- Unlimited liability
- Liable for the actions of the other partners
- Rewards are divided between the partners
Plenary activity: How many of these advantages and disadvantages can you remember and explain?
Lesson 17:
Private Limited Company (Ltd)
Lesson Objectives:
Private Limited Company | |
File Size: | 326 kb |
File Type: | ppt |
Starter activity:
http://www.businessstudiesonline.co.uk/GcseBusiness/Activities/Module1/BusinessOrganisations/BusinessOrganisationsDefined/frame.htm
http://www.businessstudiesonline.co.uk/GcseBusiness/Activities/Module1/BusinessOrganisations/BusinessOrganisationsDefined/frame.htm
private_limited_companies_factsheet.docx | |
File Size: | 17 kb |
File Type: | docx |
Advantages of being a private limited company (Ltd)
Disadvantages of being a private limited company (Ltd)
- Limited liability
- Better status in the eyes of some customers
- Continues after the death of the founders
- Can bring in investors
- Managers can be employed whilst owners retain control
Disadvantages of being a private limited company (Ltd)
- Have to register
- Have to disclose information on sales and profits (lose privacy)
- Have to have accounts independently checked (cost)
- If there are any other investors the original founder is not in full control of the business
- Must pay corporation tax
limited_liability_task_sheet_1.doc | |
File Size: | 132 kb |
File Type: | doc |