Compare and contrast sole trading and partnerships
Sole trading
They are easy to establish and there is usually no need for legal documents
The owner can take decisions independently and has full control over enterprise
Any profit made will be kept by owner
Sole traders provide more personal service
There is greater flexibility in hours of work
Sole traders may receive government support
Sole trading
There is unlimited liability which means the owner is totally responsible for any debts the enterprise has and may be forced to sell his own possessions to pay them off
There may be difficulty in raising enough finance as sole traders are most likely to be bankrupt so people are less likely to lend money to them
The owner may lack skills or experience needed
It may be difficult to compete with larger firms
A sole trader enterprise is an unincorporated buisness the owner can be taken into court if there is a dispute
Partnerships
Partnerships are easy to form. They usually require a legal contract signed by all partners. It is called the deed of partnership
Having more than 1 owner makes it easier to raise money
Partners can share decision making
Partners can specialize in particular aspects of work
A partner may be able to negotiate discounts from suppliers
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Partnership
Ordinary partners have unlimited liability. They may be asked to sell their possessions if the enterprise is in debt
A partnership might not be enough to gain economies of scale
Disagreement between partners can make decision making hard
Any decision made by one partner is legally binding to all partners
If any partner leaves or dies the partnership is dissolved
The profits are shared between the partners
The partners can be sued by customers