ASSIGNMENT – LEGAL KNOWLEDGE
OWNERSHIP STRUCTURE
BUSINESS: - A business (also called firm or an enterprise) is a legally recognized organizational entity designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit to increase the wealth of owners.
The owners and operators of a business have as one of their main objectives the receipt or generation of a financial returns in exchange for work and acceptance of risk. Notable exceptions include cooperative businesses and state-owned enterprises. Socialistic systems involve government, public, or worker ownership of most sizable businesses
There are different type of business which u can start e.g. plumbing, carpenter, restaurant, painting, finance etc. as graduate in hospitality trade and being a professional chef I would like to start restaurant business. Now to start a business we should choose a owner ship structure depending upon the need and yours requirement.
BASIC FORMS OF OWNERSHIP
Although forms of business ownership vary by jurisdiction, there are several common forms:
· Sole proprietorship: A sole proprietorship is a business owned by one person. The owner may operate on his or her own or may employ others. The owner of the business has total and unlimited personal liability of the debts incurred by the business.
· Partnership: A partnership is a form of business in which two or more people operate for the common goal of making profit. Each partner has total and unlimited personal liability of the debts incurred by the partnership. There are three typical classifications of partnerships: general partnerships, limited partnerships, and limited liability partnerships.
· Corporation: A business corporation is a for-profit, limited liability entity that has a separate legal personality from its members. A corporation is owned by multiple shareholders and is overseen by a board of directors, which hires the business's managerial staff.
· Cooperative: Often referred to as a "co-op business" or "co-op", a cooperative is a for-profit, limited liability entity that differs from a corporation in that it has members, as opposed to shareholders, who share decision-making authority
· Looking on these structures for my requirement and business needs I would like to prefer
SOLE TRADING STRUCTURE.
SOLE TRADER: -
As its name it shows that sole trader is a person who decides to start a business on his/ her own and accepts total responsibilty for the business accepting either profit or losses. It is most simple and common form of conducting business.
· The main features of trading as sole trader are:
· The business is owned and operated by one person.
· The owners keep all profits and suffer all losses.
· The sole trader may employ staff but makes all management decisions.
ADVANTAGES OF OPERATING AS A SOLE TRADER:-
· Formation: it is very simple. There is no lenghty documentation to prepare and all that is needed is a place from which to operate.
· Control: sole trader has total control over the operation of the business. He / she can decide the hours the business will be open for trade and made all the management decisions without the need to consul anyone.
· Profits: the sole trader keeps all the profit. He/she dosenot need to Share the profit with others –needless to say , some of these profit would go towards business expenses such as employ wages and can pay rents , bills etc.
· Taxation: if profits are low, taxation payments will be low. However as profit increase icome tax also increases.
· Dissolution: when a sole trade decide to end his business operaion, he dose not have to compty with particular formalities. They simply close their doors and notify the customers.
DISADVANTAGES OF OPERATING AS A SOLE TRADER:-
· Management: if the businesses become busy and successful, the burden of management on one person may place enormous obligations to the owner. In such Casses, a manager may be employed. So manager become care taker and be responsible for everything.
· Expertise: a sole tradr is expertise his alone. In other type of businss there is scope for it to expand and provide a better and wider range of services.
· Capital: capital is the name given to the money a trader raises and uses to start a business. He is limited to the mount of money he can raise and risk limiting the expansion of the business and also risk of loosing his own assests.
· Liability : it means sole trader is liable for all debts that the business occurs , if he cant pay the debts ie now he unable to pay the debts he has to sold his own furniture , home , property to pay the business debts .
· Limitations of business life: because the sole trader business does not have existence of its own, so when the owner of a business dies the business usualy ceases to operate.
So accordingly to me the sole trader is the best ownership stucture because you don’t have to depensd upon the other person , and you don’t have fear of loosing your share and you are the person who can take all the decisions without depending on others.
As every coin has two faces there are also many risks factors like burden, debt problems, management problem when business expand. But in long term and looking all expects of bussiness for me sole trading is the best