Unit 3: Financial Planning & Monitoring
Profit and breakeven
Legal Forms in business
Limited Liability
Limited liability means that the owners of a business (shareholders) risk only what they have invested into the business.
If hte business fails they lose the money that they had put into the business.
Shareholders are not responsible for paying debts
made by the business
Sole Trader
A form of business organisation which is run by an individual who owns and runs the business.
has full responsibility for financial control of business, meeting capital requirements.
Can become limited but takes a long time so most sole traders are unlimited from liabillity.
Soletraders may run the business on their own but
this doesn't mean that they can't hire people for work
Partnerships
Group betwen 2 to 20 people who contribute to capital
& expertise in enterprise.
Every partner able to take part in business actions
Partners who choose not to take part in management are
called sleeping partners
Partnerships dissolve on death of a partner or resignation
or bankruptcy
To avoid this make deed of partnership
This covers arrangements for sharing profits, liabilites in case of debt, continuation after death of partner and etc.
Partnerships don't benefit from limited liability.