Sole trader
Is there only one people in Sole trader?
Yes
Why is partnership formed?
In order to overcome some of the drawbacks of being a sole trader.
Is a public limited company in the public sector?
No, it is in the private sector.
Define social enterprise.
A business activity with mainly social objectives that reinvest most of its profits into benefiting society rather than maximizing the profit.
Define a Public-private partnership(PPP).
The involvement of the private sector, in the form of management expertise and/or financial investment, in public sector projects aimed at benefiting the public.
What is a sole trader?
A sole trader – also known as a sole proprietorship – is a simple business arrangement, in which one individual runs and owns the entire business
How many people are required to set up?
Two or more people carry on a business together.
State one advantage and one disadvantage of a public limited company.
Advantage: access to substantial capital resources.
Disadvantage: Risk of taking over due to the availability of the shares on the stock exchange.
Define microfinance.
Is it an important source of finance, and why?
The provision of very small loans by the specialist finance business, usually not traditional commercial banks.
Yes, it is a very important source of finance in developing, relatively-low income countries.
Name the three main types of Public-private partnership(PPP).
Government-funded
Private sector-funded
Government directed but with private sector finance and management.
What taxes are sole trader’s responsibilities?
Income Tax, which is a tax paid on certain types of income.
National Insurance. As a sole trader, you will pay Class 2 and Class 4 National Insurance.
Define limited liability.
means the only liability/responsibility - or potential loss - a shareholder has if the company fails is the amount invested in the company, not the total wealth of the shareholder.
What is the main difference between private limited companies and public limited companies?
New issues of shares can’t be sold on the open market and existing shareholders.
Define a non-profit organization.
Any organization that has aims other than making and distributing profit which is usually governed by a voluntary board.
What is the private finance initiative (PFI)?
Investment by private sector organizations in public sector projects.
How to register as a sole trader?
There is no specific process for registering as a sole trader. Instead, all you have to do is register as self-employed by registering for self assessment.
What is the function of the “Deed of Partnership”?
Provide agreement on issues:
voting rights
distribution of profits
the roles of management for each partner
who has the authority to sign contracts.
What is the impact when public limited companies deal with ethical issues?
They might set up ethical objectives to earn good publicity and increased sales especially for those big companies which the society would carefully examine.
Gain substantial benefits from acting ethically.
List 2 common features of social enterprise.
Directly produce goods or provide services.
Having social aims and use ethical ways of achieving them.
Needs to make surplus/profit to survive as they cannot rely on donations as charities do.
Define cooperatives.
A group of people acting together to meet the common needs of and aspirations of its members, sharing ownership, making decisions democratically.
What is the difference between sole traders and self-employed?
A sole trader is a specific business structure, whereby one individual runs and manages the whole business.
Someone is considered to be self-employed if they:
Run their own business or do freelance work
Pay their taxes through the Self Assessment system instead of PAYE.
PAYE (Pay-As-You-Earn) is a tax paid on employee income
State 1 advantage and 1 disadvantage of partnership.
Disadvantages: (optional)
Decisions take longer.
unlimited liability for all partners.
profits are shared, no continuity, cannot sell shares to raise capital.
Advantage : (optional)
Partners may be specialized in different areas of business management.
Shared decision making.
Losses shared.
Additional capital injected by each partner.
Give an example of a company transferring from a private limited company to a public limited company and explain the reason.
Reasons (possible):
A private limited company is not able to sell its shares to the public.
Advantages of private limited company:
A higher minimum number of directors.
A higher minimum value of share issues.
Advantages of public limited company:
Having an initial public offering.
List of the stock exchange.
What is the triple bottom line?
It is the three objectives of social enterprises: economic, social, and environment.
Give one potential cost and one benefit of PPP.
Costs:
Could try to increase profit by cutting staff.
Private sector organizations may lack the experience needed to operate large public sector projects.
Benefits:
Many facilities are built through the PPP/PFI schemes - it is argued that these would not have constructed unless the private sector has been involved.
Using private sector finance, the government can claim that public services are being improved, without an increase in taxes.