PUBLICSECTOR.docVIP

PUBLIC SECTOR PRIVATE AND PUBLIC SECTOR Businesses Private Sector (owned by private individuals or groups) Public Sector (owned by local or national government SOLE TADER EXPLAINED Q:Explain the meaning of the term: Sole Trader Ans:A sole proprietorship also known as a sole trader, or simply proprietorship is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business. All profits and all losses accrue to the owner. no yes SHOULD WE BE A SOLE TRADER? UNLIMITED LIABILITY EXPLAINED Q.What does the term Unlimited Liability mean? Ans: It all comes down to the responsibility for the debts of the business The owner is responsible for ALL DEBTS Must pay off all the debt using their own money if the business cannot afford to pay them May have to sell their own house or car to pay the debt PARTNERSHIP EXPLAINED 1.A partnership is a type of business entity in which partners (owners) share with each other the profits or losses of the business. 2.A partnership may consist of between two to twenty individuals; however, certain professional bodies are exempted from this upper limit. (Accountants, Solicitors and Architects, for example) 3.The maximum number is 20 4.They are easy to set up but may have a partnership deed They are unincorporated 5.They have unlimited liability except for the sleeping partner 6.Partnerships are often favoured over corporations for taxation purposes, as the partnership structure does not generally incur a tax on profits before it is distributed to the partners (i.e. there is no dividend tax levied] PARTNERSHIP EXPLAINED CONT: BUT sleeping partner has limited liability because they do not control the debt that the business may occur .However, depending on the partnership structure and the jurisdiction in which it operates, owners of a partnership may be exposed to greater personal li