Edexcel Business A Level Revision

Sole traders - (Unincorporated) An individual owning the business on his/her own. Registered as self-employed and has unlimited liability. The sole trader owns all the businesses assets personally and is personally liable for the business debts. Therefore, their home and all of their assets may be used to pay off any debts that may incur and are unable to pay ADVANTAGES Quick and easy to set up (they can always be transferred to a limited company once launched) Simple to run - owner has complete control over decision making Minimal paperwork Easy to close/shut down All profits go to the shareholder Financial records remain private Motivation is high as the success of the individual and the business are one and the same DISADVANTAGES Full personal liability - "unlimited liability" Harder to raise finance - sole traders often have limited funds of their own and security against which to raise loans The business is the owner - the business suffers if the owner b...

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...