1. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

2. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Sole trader businesses Partnerships Limited companies

3. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Sole trader - characteristics Only one person responsible for management Business usually remains small Liability - possibility of personal bankruptcy Informal and easy to set up

4. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Partnership - characteristics Run by two or more people Business usually small, but not always Partners may have complementary skills Liability - possibility of personal bankruptcy Easy to set up - but formal legal agreement is recommended

5. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Limited company - characteristics Limited liability Legal formalities relatively complex Some financial information made public In larger companies, shareholders can appoint professional managers

6. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning ADVANTAGES Easy to start No legal formalities Self-reliance Keep all profits DRAWBACKS Personal liability Remains small- scale Bear all losses No problem sharing Limited skills

7. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning ADVANTAGES Management shared Decisions not taken alone Risks are shared Losses are shared DRAWBACKS Responsible for each other’s actions Unlimited liability Profits shared

8. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning ADVANTAGES Limited liability Can appoint directors Spread of ownership easy Transfer of ownership easy DRAWBACKS Legal requirements - professional advice required Extra administration and costs

9. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Existing resources Retained profits Borrowed money Leasing/hire purchase Factoring Grant finance Financing companies: share issues Financing companies: venture capital

10. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Cost of borrowing The risk/return relationship Security Overdrafts

11. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning

12. Use with Business Accounting and Finance Second Edition by Catherine Gowthorpe ISBN 1-84480-200-0 © 2005 Thomson Learning Income taxes (personal taxes) Corporation tax Capital gains tax Value added tax