...In 1977, Steeby and Fial formed a partnership to perform auditing services. They shared equally in the equity, income and profits of the partnership. They began the partnership as the only one performing the services but eventually had to hire independent contractors to do the work. In 1984, Steeby and Fial were supervising and finding new work but not performing the services. Fial’s activities generated 80% of the business and Steeby the other 20%. Fial was unhappy with the arrangement and wrote Steeby to dissolve the partnership. He said that the dissolution should simply require assignment of accounts. Fial told the ICs that their obligations to the partnership would be terminated on 9/10/84 and Fial then terminated the contacts with the clients and put them under Ks with his new firm. He then hired new auditors to do the auditing. The partnership was formally terminated on 5/23/85. Steeby sued for breach of the partnership agreement and for final accounting of the assets. Trial court found that Fial had breached the agreement by breaching his fiduciary obligations. The breach occurred when: 1) he fired the auditors and dissipated the assets of the partnership; 2) terminated the contracts with the clients and taking over the work. JUDGMENT: Upheld trial court’s determination of breach of fiduciary duty and the constructive trust. A sole trader works alone, he/she is liable for everything about the business, day-today running of the business, its success and failure...
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...Course: Instructor: Date: 1. Advantages of a sole trader * Ease of formation and dissolution Compared to other forms of business, sole trader is one of the cheapest businesses to set up and to administer. Its administration system requires only the accounting and bookkeeping system to show the business profits or loss, and the business revenue and expenses. * Direct motivation and secrecy The owner owns all the risk associated with the business hence he or she is motivated to work hard to minimize loss and maximize profit. Similarly, since the business is operated by one person, the business secrets are only known by the owner. The sole trader does not have a legal obligation to publish the business accounts. Therefore, the sole trader maintains the business secret from competitors. * Ease of money handling. The business is operated by one person hence; handling of money is easier than other forms of business like partnership. The owner does not require any payroll to pay him or herself. In most cases, the employees are paid daily; hence they do not require a pay slip. * Government regulation Sole trader is least affected by government rules and regulation. Sole traders are not eligible to corporate taxes and do not compile with licensing requirement. Likewise, paperwork required is much less compared to corporate or partnership. Thus, setting up sole trader is much easy. * Tax benefits The owner of the sole trader is not required to file a separate business...
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...Sole proprietorship Sole proprietorship concern (also known as a sole trader/owner) is the most common and most favored option for individuals who want to establish a small business in Pakistan, or want to start a home-based business. This form of business is used by majority of start-ups on Pakistan, and it is the simplest way of giving corporate face to a small business Formation Following are the main steps to start a sole proprietorship business: · Finalize a business name. · Print basic business stationary i.e. letterheads, visiting cards etc. · Prepare firm's name stamp (a common rubber stamp will do). · Open a bank account in the name of sole proprietor business. The bank manager will require a request letter on business letterhead with sole proprietor’s signature and stamp. · Get bank statement of the newly opened bank account. · Apply for National Tax Number (NTN) certificate. Bank account statement and a copy of sole proprietor’s computerized national identity card will be required along with application for NTN. If sole proprietor already has NTN there is no need to get a new one as the existing NTN can be used for business documentation. Characteristics There is no requirement to register a sole proprietorship in Pakistan. Any business can be conducted through a sole proprietorship unless the law requires a certain business to be carried out only by an association of persons, for example a partnership firm or a limited liability company. Sole proprietorships...
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...paper will discuss and assess the three legal structures; sole traders, partnerships and incorporated bodies. Thus, establishing the features, operations, advantages and disadvantages of each. A sole trader is the simplest type of business structure. Tracey defines a sole trader as “a term used to describe an individual who carries on a business or profession without partners”. An alternative term is ‘sole practitioner’. The individual is free to engage in any kind of lawful business activity. Although small, a sole trader is not necessarily any less successful than a larger business. According to the Office of National Statistics, as of 2013, sole proprietors represented 62.6%, of all UK private businesses. Martin McNaughton, from Newry, founded Glen Dimplex in 1973, manufacturing heating pumps. He now ranks at number 736 on the Forbes Rich List, employing 10,000 staff, making a billion sales each year.The main advantage of being a sole trader is having total control over the business. There are no shareholders nor business partners one can be held accountable to. The business person can therefore make any decisions they see fit. In addition to this a sole trader receives, and keeps, 100% of the profits earned by the business and can cease trading at any time. Sole traders are not bound by a regulatory body, nor are they subject to the same filing requirements of a company. Instead the two main obligations a sole trader must comply with are the following; registering with...
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...businesses Sole trader: Sole trader describes any business that is owned and controlled by one person, although they may employ workers, e.g. a newsagent's shop. Individuals who provide a specialist service like hairdressers, plumbers or photographers, are also sole traders. Sole traders do not have a separate legal existence from their owner. As a result, the owners are personally liable for the firm's debts, and may have to pay them out of their own pocket. This is called unlimited liability. Advantages: 1. The firms are usually small, and easy to set up. 2. Generally, only a small amount of capital needs to be invested, which reduces the initial start-up cost. 3. The wage bill will usually be low, because there a few or no employees. 4. It is easier to keep overall control, because the owner has a hands-on approach to running the business and can make decisions without consulting anyone else. Disadvantages: 1. The sole trader has no one to share the responsibility of running the business with. A good hairdresser, for example, may not be very good at handling the accounts. 2. Sole traders often work long hours and find it difficult to take holidays, or time off if they are ill. 3. Developing the business is also limited by the amount of capital personally available. 4. There is also the risk of unlimited liability, where the sole trader can be forced to sell personal assets to cover any business debts. Partnership: Partnerships are businesses...
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...These are sole proprietor, partnership and company. Option 1: Sole proprietor A sole propriety is an option for the start-up whereby one individual of the pair would control and manage the business. For example, David starts up, controls and manages the business and Christina is merely employed by David. The registration requirements of a sole proprietor would include David as the owner applying for an Australian Business Number and for a Tax File Number (Birt et al. 2012). David will need a TFN as and income he earns as a sole trader will be treated as his income and taxed accordingly. David will have sole responsibility for paying tax on the business’ income. David will have many options for the way he chooses to report the entity’s financial position. This may include using an accounting package such as MYOB to determine profit. A sole-trader structure is commonly used for hairdressers and tradesmen (Birt et al. 2012). Advantages: * The company start-up and wind-down is fast and is not costly. * The paperwork required to start-up is minimal (Birt et al. 2012). * David will have complete autonomy over the running of his business. * David will not be bound by accounting standards and legal regulations. * David can use accounting packages to report financial position of company- easier to use. * David does not pay a separate income tax for his business (Birt et al. 2012). Disadvantages: * David as the owner will have full and sole liability...
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... including associations, joint venture, trust, sole trader, partnership and companies. The report briefly explains the reasons for abandoning associations, trust and joint venture and focuses on the advantages and disadvantages of applying sole trader, partnership and companies. Overall, the report provides the best business structure to Sheldon. Associations, joint venture, trust Associations are the business structure for not-for-profit activities (such as sporting or community services groups), which can be divided into unincorporated and incorporated associations. Sheldon’s business is created to make profit. That is to say the associations are irrespective in Sheldon’s case. Joint venture is simply a contractual arrangement between two or more people that they will cooperate to conduct a particular venture or related ventures in a relatively specific period of time. While in Sheldon’s case, it is more appropriate to create a long-lasting relationship, which means joint ventures are excluded. Trust is a separation of legal ownership of assets (Trustee) from beneficial rights (Beneficiaries) attached to assets. In Sheldon’s case, the new piece of machinery developed by Sheldon which will revolutionise farming practices is the assets which could be generate beneficial right to the beneficiaries, while Sheldon is still using this assets means there is no separation of the ownership. Sole trader Sole trader is used to describe the situation where an individual...
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...in the UK, these are Private, Public and Voluntary sectors. Types of businesses in UK? The private sector has different categories which are sole traders, partnerships, companies and franchises. A sole trader is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. Being a sole trader is considered the simplest way to run a business as it does not involve paying any registration fees. You must register as self-employed, keeping records and accounts is straightforward, and you get to keep all the profits. The difference is that you are personally liable for any debts that your business runs up, which can make this a risky option for businesses that need a lot of investment. Examples of sole traders are plumbers, electricians etc. These can even be small web based businesses or home based business. Sources of Advantages *The firms are usually small, and easy to set up. *Generally, only a small amount of capital needs to be invested, which reduces the initial start-up cost. *The wage bill will usually be low, because there a few or no employees. *It is easier to keep overall control, because the owner has a hands-on approach to running the business and can make decisions without consulting anyone else. Disadvantages *The sole trader has no one to...
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...cooperative. There are many types of business organisations: Sole trader, Partnership, Private Limited Company (Ltd), Public Limited Company (Plc), Co-operatives, Franchises and Public sector. The first three types of business organisations will be highlighted in this report as they are the main types of businesses in Scotland. Identification of the main types of organisations recognised in Scots law Sole trader is a type of business organisation started, owned and run by one person. Other term for sole trader is entrepreneur which refers to the self-employed person who manages the business and is responsible for business’s profits and losses. One of the most important features of sole trader is unlimited liability which means that the owner of the business risks everything he owns such as house, car and even the business. Partnership is organisation where a number of people share the ownership of the business. Partnership is a useful form of organisation for professional type of business such as accountants or lawyers. Each partner is an entrepreneur, that is, part owner and exercises joint control. Profit is shared equally between partners. Pillans Brothers v Pillans (1908) The Pillans brothers were running the business that was manufactured nuts and bolts in Motherwell. One of the brothers bought another nut and bolts factory few miles away from his brothers’ firm and started trading as a sole trader. His brothers...
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...Business Organisations Public Limited Company * A public limited company is the largest type of business. These companies end their names with plc, the shares are usually traded on the stock exchange and can be owned by members of the public and institutional investors such as large banks and insurance companies. This type of business can raise a large amount of money by selling shares and use this to expand or develop the enterprise. All shareholders have limited liability. Limited liability is when the shareholders (owners of the company) are legally responsible for the debts of a company, only the value to their shares. Advantages: * Shares can be advertised * Shares can be sold through the stock exchange * Cheaper borrowing and bulk purchasing * The companies name is protected * The company continues despite the death, resignation or bankruptcy of management and members * Employees can acquire shares Disadvantages: * Going public can be expensive * Some plc's so large that they become difficult to manage effectively * Risk of takeover by rival companies who have bought shares into the company. * Market goes up and down so it’s a gamble * Extra work involved with dealing with investors. * Public limited companies become plc’s because they can sell shares on the stock exchange which will bring in a lot of income. This can be used to expand the business. The bad thing of becoming a plc is you could lose ownership...
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...four different organisations Sole Traders A Sole trader is person who owns a business of their own. Being a sole trader is the easiest way to start a business. If you become a sole trader you don't have to pay any registration fees, keeping records and accounts is simple, and you get keep all the profits. Advantages The owner has control of the business Cheap and easy to start up – few forms to fill in and to start trading the sole trader does not need to employ any specialist services, other than setting up a bank account and informing the tax offices. The owner keeps all of the profit The Business affairs are private competitors cannot see what you are earning, so they will know less about how the business works and how it succeeds. Disadvantages Sole traders have unlimited liability which means that if the business goes bankrupt then the debt will be payed off his/her possessions like car , house Sole traders have no one to discuss about their business decisions If the owner is ill or is on holiday then their is no one to takeover and run the business which means that the business will be closed until the owner comes back. Partnerships Partnerships have unlimited liability The registration of a partnership is not compulsory If a partner in the partnership wants to transfer his share then he can only do that with every other partners permission otherwise he can’t. Private Limited Companies Private limited companies are owned by people who know each...
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...talking about what each type of owner ship in tales and what the advantages and disadvantages of each are. The main types of ownerships are: * Sole trader * Partnership * Private Limited Company * Public Limited Company * Franchise * Working Co-operative I am going to research the different types of ownerships using the internet and text books to gain an understanding of what each type of ownership consists of. This will therefore help me gain a wider and deeper knowledge and understanding of aspects of each ownership, for example the advantages and disadvantages. Sole trader A sole trader is the smallest and simplest form of business ownership and consists of very few legal requirements which is why it is one of the most common within the UK with over 3 million business running. Sole traders are businesses that are started by only one individual and they will be one legal owner of the business, however they may employee people to work for them. Being the only legal owner give great amount of freedom, they will be their own boss therefore all the decisions will come down to them. A sole trader has unlimited liability, this means if the business goes bankrupt then any of their assets can be sold to pay of any unwanted debts including their house, car, electrical items etc… this can make a sole trader businesses more risky as you are not only risking your money within the business put your general life possessions....
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...Investigating Different Business Sole Trader – Sole Trader is the most common and the simplest form of business organisation. It is usually owned by one person but there may be several employees. The sole trader is for responsible every aspect of the business for example; keeping the premises clean, doing accounts, and paying taxes on the profits. The sole trader can keep all the profits each year after paying the taxes. An advantage of being a sole trader is that you are fully in charge which means that they don’t have consult between anyone else. Another advantage is that the wage bill will usually be low, because there a few or no employees. A disadvantage of being a sole trader is that Sole traders often work long hours and find it difficult to take holidays, or time off if they are ill. Also another disadvantage is that developing the business is also limited by the amount of capital personally available. Partnership – Partnership is usually owned and run by two or more people. Both owners are equally and personally liable for the debts from the business. Most partnership is small such as local accountants, solicitors, doctors and vet. An example of a partnership is Fat Joes. Ltd – Ltd also known as Private Limited Company is a company that cannot sell shares to the general public. Each owner has a share of the business and therefore is known ‘shareholder’. If the company is successful, then the shareholders receive a financial reward. An example of an Ltd business...
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...HISTORY OF PARTNERSHIP A partnership is an agreement between two or more people to finance and operate a business. Partnerships, unlike sole proprietorships, are entities legally separate from the partners themselves. In a general partnership, however, profits and losses flow through to the partners’ tax returns. Each general partner has equal responsibility and authority to run the business. Each partner should be involved in day-to-day operations of the business, and should make management decisions. Any partner may represent the business without the knowledge of the other partners—the actions of one partner can bind the entire partnership. If one partner signs a contract on behalf of the partnership, the general partnership and each partner are responsible for that contract. The shared ownership concept that characterizes a business partnership gives it certain distinct advantages and disadvantages. Partnerships are relatively easy to establish; however time should be invested in developing the partnership agreement. In a partnership agreement, the following arrangements, among others, should be spelled out: 1. How the business will be financed. 2. Who will do what work? 3. What happens if a partner dies? 4. What happens if one or both partners want to dissolve the partnership. It is strongly recommended that an impartial attorney be contacted to write the partnership agreement. Here's how to find the right attorney. 1.1 WHAT IS PARTNERSHIP Partnership occurs where...
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...Sole traders A sole trader describes any business that is owned and controlled by one person - although they may employ workers. Individuals who provide a specialist service like plumbers, hairdressers or photographers are often sole traders. A hairdresser trimming someone's hair Sole traders do not have a separate legal existence from the business. In the eyes of the law, the business and the owner are the same. As a result, the owner is personally liable for the firm's debts and may have to pay for losses made by the business out of their own pocket. This is called unlimited liability. Advantages * It is easy to set up as no formal legal paperwork is required. * Generally, only a small amount of capital needs to be invested, which reduces the initial start-up cost. * As the only owner, the entrepreneur can make decisions without consulting anyone else. Disadvantages * The sole trader has no one to share the responsibility of running the business with. A good hairdresser, for example, may not be very good at handling the accounts. * Sole traders often work long hours. They may find it difficult to take holidays or time off if they are ill. * They face unlimited liability if the business fails. http://www.bbc.co.uk/ Partnerships Partnerships are businesses owned by two or more people. Doctors, dentists and solicitors are typical examples of professionals who may go into partnership together and can benefit from shared expertise. One advantage of...
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