Definitions
A single person operating a business under their own name.
What is a sole trader?
Liability of an incorporated organisation is limited to the outstanding membership and subscription fees.
Members of an unincorporated organisation can be liable for debts and legal claims.
What is the liability of not for profit organisations?
Profits of the business are distributed to the partners and considered taxable personal income.
The business can be run in the name of the owner or a business name can be registered.
Who owns a sole trader business?
Unlimited liability - if the business goes broke, the owner could lose personal assets (like their house) to pay off business debts.
No one to share the workload with.
What are disadvantages of sole trader ownership?
A separate legal entity. It has Proprietary (Pty) and Limited (Ltd) in its name.
What is a private company?
Unlimited liability. All contracts and assets are in the owners' names.
What is the liability in a partnership?
The type of taxation depends on the form of business that owns it.
Fees and royalties are tax deductable.
What type of tax does a franchise pay?
Unincorporated organisations are not a separate legal entity while incorporated organisations are.
Who owns a not for profit organisation?
Easy to establish, partners can bring in money and skills, work can be shared amongst partners.
What are advantages of partnership ownership?
A business arrangement where the owner licences the business model in return for ongoing fees and royalties.
What is a franchise?
The owner has unlimited liability and are liable for all debts and damages owed by their business.
What is a sole trader liable for?
The business completes a tax return and pays tax at a company rate.
How do private companies pay tax?
Owned by no more than 50 shareholders and shares cannot be offered to the public.
Who owns a private company?
Limited liability - personal assets are not taken to cover business debts.
Expensive to set up and less say in the running of the business as there are so many owners.
When 2 or more people go into business together to make a profit.
What is a partnership?
Liability of debts depends upon the form of business that owns the franchise.
What is the liability for franchises?
Profits of the business are taxable income of the owner.
What type of tax does a sole trader pay?
The franchisee owns it. They may sell it to another person but there may be conditions set by the franchisor.
Who owns a franchise?
Unlimited liability. There can be disagreements between partners and rules must be set for partners leaving otherwise the partnership will end.
What are disadvantages of partnership ownership?
An organisation that does not operate for profit or individual gain. Profits go back into the operation of the organisation.
What is a not for profit organisation?
Liability of shareholders is limited to any unpaid shares.
Who has liability in a private company?
If approved by the ATO they can be exempt for income tax.
What type of tax do not for profit organisations pay?
Contracts entered into by one partner are binding on all partners. New partners can enter with the consent of all partners.
Who are the owners in a partnership?
The owner has full control, keeps all profits and it is easy to set up.