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Sole Traders and Partnerships


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Sole Trader
A business owned by one person and with unlimited liability
Benefits of Sole Trader
Quick, Simple and Easy to setup
Drawback of Sole Trader
Risk of Unlimited Liability (Personal Debt)
Liability
The responsibility of the owner for the debts of the business
Limited Liability
When liability is limited to the amount a shareholder has invested
Unlimited Liability
Owners of the business are responsible for all business debts
Partnership
A business run by two or more people and is unlimited liability
Benefits of a Partnership
A balanced amount of work, profit and responsibility
Drawback of a Partnership
Legally responsible for Partners actions (Debts must be paid equally)
Sole Trader (Legal Structure)
Unincorporated and Unlimited Liability
Incorporation
The process of forming a limited liability company (e.g. PLC or Private Limited Company)
Partnership (Legal Structure)
Unincorporated and Unlimited Liability
Unincorporated
The business owner(s) and the business are as one
Private Limited Company (Legal Structure)
Incorporated and Limited Liability
Private Limited Company
A business with shareholders that has limited liability