Although there are several forms of business organisations, one of the oldest and most usual form of business organisation is considered to be the ‘Sole Trader’ ownership as provided by Maheshwari (1997, p.147). This essay will analyse the concept of sole trader business highlighting its benefits and disadvantages in comparison with other forms of businesses by also taking as example sole traders within the transport sector in the tourists industry around the world. Finally, it will investigate how the sole traders could enter different market (relative to transport for tourists) overcoming their disadvantages. Sole Trader A sole trader business can be defined as a form of small commercial ownership where only one person owns and manages a firm as provided by Kapoor et al. (1992). Although members of the sole trader’s family can help with labour, the sole trader is his own boss and the business itself does not have any shareholders. Furthermore, the Dictionary of Economics and Commerce by Hanson (1986) defines this business as: “a type of business unit where one person is solely responsible for providing the capital for bearing the risk of the enterprise and for the management of the business.” Indeed, although the sole trader has the satisfaction of being the owner of the firm, which is an important motivation as noted by Shaw (2002, p.7), he is responsible for the profits or losses of his business. As a result, in case of bankruptcy the sole trader may be forced to sell his personal proprieties in order to pay off his debts. Bullivant (2010, p.123) argues that in the case of the sole trader, there is not difference between business debt and personal debt as they are the same from a business point of view. Sole trader Advan... ... middle of paper ... ...m a human resource point of view, those businesses can be easily managed due to their size and the sole leader’s family members can help with the labour, absorbing the costs. Lastly, sole traders could use low cost marketing strategies such as mouth-to-mouth, post letters and the use of social medias in order to promote their business at a low cost. Conclusion It is clear that within the private sector the sole trade ownership is the most famous form of businesses, which is established by a single individual only. This ownership can be seen as risky due to the unlimited liability of the sole leader and also due to limited economic resources. However, it also has several positive features as previously pointed out. In conclusion, although can be risky, sole trader businesses can be profitable and easily enter and exit the market if a correct management is followed.
(Longenecker, Petty, Palich, Hoy, Pg. 201) This organizational form is the most common with small business and while it allows the owner to receive all the profits it also makes the owner shoulder all the legal responsibility of ownership.
As with many small business owners they vision of their business usually only extends to their own abilities. They are driven and full of determination and believe their abilities will be able to sustain the business to success. Unfortunately, many small businesses lack the knowledge to be able to effectively be owners’ and leader’ to their organizations.
Self-owned and operated: Owner is able to make all decisions concerning the business, creating no conflict in business decisions. Being able to keep all profits made from business.
Forms of Private Sector ownership are: Sole Trader, Partnership, Private Limited Company, Public Limited Company, Franchisee, and Co-operatives. Sole Trader These are... ... middle of paper ... ...ility. This is why many small businesses that have only a small number of partners will change their business ownership and become a private limited company. Background Information When Mac and Dick McDonald first ran their restaurant in San Bernardinosuccessfully for 21 Years it was a form of partnership, in which they made high profits which they were happy with.
Since it’s the easiest form of business to start why not take full advantage. But there are advantages and disadvantages. In a sole proprietorship there is limited capital which means the owner would have trouble getting the supplies and materials needed for. But it would also seem harder to borrow money and loans from the bank. A loan from the bank seems like the ...
Jensen, M.C and Meckling, W.H (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, October, 1976, V. 3, No. 4, pp. 305-360. Available on: http://www.sfu.ca/~wainwrig/Econ400/jensen-meckling.pdf. [Accessed on 20th April 2014].
For the introduction, brief information regarding my purchase and the travel and tourism industry is presented. It was then followed by the explanation of the 2 chosen theories from two different chapters.
In company law, registered companies are complicated with the concepts of separate legal personality as the courts do not have a definite rule on when to lift the corporate veil. The concept of ‘Separate legal personality’ is created under the Companies Act 1862 and the significance of this concept is being recognized in the Companies Act 2006 nowadays. In order to avoid personal liability, it assures that individuals are sanctioned to incorporate companies to separate their business and personal affairs. The ‘separate legal personality’ principle was further reaffirmed in the courts through the decision of Salomon v Salomon & Co Ltd. , and it sets the rock in which our company law rests which stated that the legal entity distinct from its
According to Corporation Act 2001 s124(1), it illustrates that ‘’A company has the legal capacity and powers of an individual both in and outside the jurisdiction” . As it were, company as a legal individual must be freely with all its capital contribution shall embrace liability for its legal actions and obligations of the company’s shareholders is limited to its investment to the company. This ‘separate legal entity’ principle was established in the case of Salomon v Salomon & Co Ltd [1987] as company was held to have conducted the business as a legal person and separate from its members. It demonstrated that the debt of company is belonged to the company but not to the shareholders. Shareholders have only right to participate in managing but not in sharing the company property. Besides ,the Macaura v Northern Assurance Co Ltd [1925] demonstrates that the distinction between the shareholders and company assets. It means that even Mr Macaura owned almost all the shares in the company, he had no insurable interest in the company’s asset. The other recent case is the Lee v Lee’s Air Farming Ltd [1961] which illustrates that the distinct legal entities between employee ad director allows Mr.Lee function in dual capacities. It resulted that the corporation can contract with the controlling member of the corporation.
A small business can be defined as a legal entity consisting of very few employees. Establishing a business such as a proprietorship is the least complicated among business structures. Proprietorships also have a major advantage over other business structures with regards to filing taxes. Profits generated by the business are taxed at individual tax rates thus avoiding the double taxation incurred by corporations. Local economies, government offices, schools and the unemployed benefit greatly from the growth stimulated by these companies. The taxes collected from small businesses and job creation makes small business a vital part of the community.
There are many advantages and disadvantages when owning your own business. When you own you own business, it’s known as a sole proprietorship. But with any type of business, there will always be advantages and disadvantages.
This essay is the respond to the Local Council Member who has wrong idea about a common archetype of adventure tourist. This misconception based on ignorance of current tourism industry, could potentially be a dangerous for local economy and development. The local authority must be well informed about present conditions with the tourism market, before they will make a far reaching decisions about the development direction in this industry. Currently, there are many organisations whose monitoring an international tourism business and this knowledge supposed to be good use for our common good.
There are various definitions of smaller enterprises provided from different times and areas. One of the earliest definitions was provided by Bolton Report (1971), which has indicated that a small enterprise should meet three criteria: independent (not part of a larger enterprise); managed in a personalized manner(simple management structure); relatively small share of the market(the enterprise is a price ‘taker’ rather than price ‘maker’). There are also quantitative definition of the smaller enterprise in terms of measurement of the assets, turnover, profitability and employment from different sectors and countries (Bolton, 1971).
Small businesses are common in many countries, and it depends on the economic system in the country. Examples include: small shops, hairdressers, tradesmen, lawyers, accountants, restaurants, photographers, small-scale manufacturing etc. Small businesses are usually independent businesses that have little influence on the market.
Individuals joined together to make profits dating back to the 16th and 17th century, by funding explorers to the new world looking for wealth, riches, and fortunes. These early joint ventures had no formal agreements or laws governing their transactions. A simple hand shake and verbal agreement was sufficient. The early laws of incorporation came in to being in the late 19th century, but there was not corporate governance. During the Roaring ‘20’s the United States experienced great economic growth with the average American investing in the Stock Exchange. The failure of the Stock Exchange and the Great Depression called attention to how companies were governed, but there still was a lack of a presence of corporate governance.