Sole Trader Essay

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Btec Business AssignmentIntroductionSole-TraderA Sole-Trader is a business organisation.

Btec Business Assignment

Introduction

Sole-Trader

A Sole-Trader is a business organisation which is owned and managed by one person. Implied in this is that ownership is under one person and this individual could employ a lot of people to work for him.

One key feature of a sole trader is that of limited liability. A limited liability refers to the situation whereby he or she looses both the invested capital and private property when the business winds up. Advantages for a sole trader are that profits would not have to be shared and decision making would be easy because the sole trader would not have to consult anyone in decision
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The disadvantages for a private limited company could be that it could be difficult to find suitable shareholders and also could be disagreement between existing shareholders.

Limited liability Company

A limited liability company (LLC):

· is a type of business ownership combining several features of corporation and partnership structures

· is not a corporation or a partnership

· may be called a limited liability corporation; the correct terminology is Limited Liability Company

· Owners are called members not partners or shareholders

· Number of members is unlimited and may be individuals, corporations, or other Limited Liability Companies

Advantages of Limited Liability Company

Limited Liability: Owners of a LLC have the liability protection of a corporation. A LLC exists as a separate entity much like a corporation. Members cannot be held personally liable for debts unless they have signed a personal guarantee.

Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is say, 50-50, LLC

Flow Through Taxation: All your business losses, profits, and expenses
flow

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