Sole trader and partnership business

Sole dealer and confederacy airhttp//en.wikipedia.org/wiki/Sole_proprietorshiphttp//www.irs.gov/ taskes/sm completely/article/0,,id=98214,00.htmlhttp//www. crinklelink.gov.uk/bdotg/ execute/detail?type=RESOURCESitemId=1073789609http//www.myown trade.org/s4/http//www.bytestart.co.uk/content/19/19_1/what-is-a- mend-dealer.shtmlhttp//www.bbc.co.uk/schools/gcsebitesize/ line of credit/aims/partnershipsrev1.shtmlhttp//www. come with-wizard.co.uk/Glossary/Private_Limited_Company.htmAmong the similarities amongst a sole trader and partnership business is that they both produce un curtailed liability. Unlimited liability means in the event that the business becomes belly-up(predicate), the owner bequeath gull to be responsible for paying all the debts of the business even if it means selling off his ad hominem as chastens to derive the debts. In a partnership, a partner will similarly have to pay off all the debts of the business if other partners become insolvent but if only the business becomes insolvent the debts can be sh bed among partners. This how ever is non applicable to the sleeping partner. The way both businesses argon payd is also similar. For example, they atomic number 18 financed with bank loans, personal savings and contributions from friends and family. The two businesses affect to be registered under the Registration of Business Act and ope pass judgments in the hush-hush sector. This means that n star of this structure of businesses is owned by government. The owner of a sole trader and partners in a partnership atomic number 18 taxed at a personal tax rate according to the services the business makes. Dealings of both types of business are confidential and only urgency to be revealed to the government. twain are easy and cheap to set up.Among the differences in the midst of a sole trader and partnership business is a sole trader business has only one owner whereas a partnership has 2-20 owners. The sole trader is fully respo nsible for the rivulet of the business from solar day to day so, the success of the business is limited to the abilities of the owner. In a partnership, business decisions are made by casting votes among the partners and they assigned specific operation in the business. There are much people to contribute skills and expertise. all(prenominal) profits gained in a sole trader business are received by the owner whereas in a partnership the profit is split according to the ratio which was previously agreed in the partnership agreement. When dissolving the business a sole trader can fragment by himself whereas a partnership implys consent from partners.One of the similarities among sole trader business and privy company is that both of them are created to generate profit for the owners. Also both are hugger-mugger companies. Both need to be registered as orphic entities. Therefore they do not have to make reports on their business to be released to the public. Such reports nee d only be disclosed to the government. This maintains confidentiality in the business.Among the differences surrounded by the two business structures are the number of owners. A sole trader has only one owner while a private company has 1-50 owners which are called shareholders. A private company is a different person from the owner. This means the owner and management of the company is separated. The liability of a sole trader business is unlimited whereas in a private company its limited. This means that in the event that the company goes bankrupt the maximum shareholders of a private company can lose are the amount they have invested in the company. A sole trader business has limited life whereas a private company has perpetual outlastence. This means that the company will still exist even if there is a change in ownership. A private company business is taxed at a fixed tax rate of 30% whereas the sole trader can get a personal tax rate of 30% or more. Decisions of a sole trade r business is made by the sole trader whereas in a private company they are made by the management group. It is easier and cheaper to set up a sole trader business compared with a private company. The Sole Trader can have unlimited borrowings subject to the limit of its financial standing but for the Company, its borrowings are guided by articles as contained in their Memorandum of Association. It is easier for a Private Company to raise finance compared to a Sole Trader.I would advise Lydia to veer the business into a partnership. Assuming that the business hasnt been doing well for the past three years, extra smashing that can be raised by say-so partners can financial aid the business to acquire better equipment and teachers. Also assuming that the potential partners are experts in the IT field or good businessmen they can bring in in fresh ideas and expertise to help the business grow. Fresh ideas will help beca practise a business has to always adjust according to the ever changing needs of consumers and because. Other similar businesses are always modify themselves. Therefore Lydias business has to improve too in order to go on competitive. Extra capital, expertise, and ideas from potential partners will help the business in that way. not only that, work gets done even faster when there are more people running it. Therefore the running of the business is more efficient. Furthermore it does not take a lot of money to convert the business to a partnership. Assuming that Lydia is a friendly person, personality clashes between partners would be rare. The partnership is not likely to bankrupt assuming that Lydias potential partners have a solid financial background. It is not advisable for Lydia to pass water a company because it is costly to set up. Since the business has only been running for three years it wouldnt have generated enough revenue to be reborn into a company. Moreover turning it to a company will growing government regulation on her business. This will greatly decrease the businesss flexibility. It is also not advisable for her to stay as a sole trader because she needs new capital to upgrade equipments that have been in use for 3 years now and that is hard to do if she stays as a sole trader. Also assuming that she is married, the business wouldnt have to turn out down temporarily because of her taking a maternity leave. This is because her partner would be able to take over the business for the mean time.