Edexcel Business A Level Revision

Partnership -  (Unincorporated) where two or more people share the costs, risks and responsibilities or being in a business together. The partners between them own all of the businesses assets and owe all business liabilities, therefore have unlimited liability. The legal partnership agreement sets out how the partnership is run, covering areas such as; How profits are to be shared What the partners have to invest into the business How decisions are taken What happens if the partner dies or wishes to leave You can also have "sleeping partners" who invest, BUT do not manage the business. ADVANTAGES Business benefits from the expertise and efforts of more than one owner. Partners can provide specialist skills Greater potential to raise finance - partners each provide investment Risks, costs and responsibilities shared Financial records remain private DISADVANTAGES Full personal liability - "unlimited liability" A poor decision by one partner dam...

Liability - is a company's financial debt or obligations that arise during the course of its business Limited liability - An investor's liability/financial commitment is limited to the total amount invested or promised in share capital. An investor's personal belongings beyond this venture are protected. Unlimited liability - The owners of a business are responsible for the total amount of debt of the business. The owner may lose their personal belongings, e.g. home and cars, if the value of these is needed to cover the debts of the business. UNLIMITED LIABILITY IS SEEN AS A HIGH RISK Incorporated - An incorporated business (also called a corporation) is a type of business that offers many benefits over being a sole proprietor or partnership, including liability protection and additional tax deductions. Forming a corporation also allows you raise capital through sale of shares of your company . Creditors - is owed money, either by a business or an individual f...