LegalForms - Principles of Business Management Legal Forms...

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Principles of Business Management Private sector: 1. The sole trader: - is a business owned by one individual who is self empoyed and who may, in some cases, employ other people either part-time or full. - if a success: all profits accrue to the owner and it is common for sole traders to reinvest heavily to reduce past borrowings. - if a failure: all losses are the responsibility of the owner who has “unlimited personal liability” for their debts of the business. - in the UK 80% of all businesses are sole traders. - if turnover exceeds a certain sum (e.g. £55,000 in 2002) they need to register for VAT. - day-to-day runnings, long term plans etc. are in the hands of the owner. - fail due to: bad debts, increased competition, higher interest rates, fallin demand etc. 2. The partnership: - The Partnership Act 1890 defines a partnership as “a relation which subsists between persons carrying on a business in common with a view to profit”. - the partners both have unlimited personal liability, or by joining under the Limited Partnership Act 1907 they have limited liability (not common) - under the law, most partnerships are limited to 20 or less, however some businesses (esp. in the
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LegalForms - Principles of Business Management Legal Forms...

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