(How small organisations exist in the intensive competition.
As we know there are lots of different businesses vary in size from the small one-man business (newspaper kiosk) to the gigantic companies (Mc Donald's). But how could the small shops stand next to the giants? We should know the conditions. Why is it good for the people to have a small shop if not far from them there is a big supermarket? .
What is a sole trader? Being a sole trader means that only one person owns the business and either could works alone, or employs others. This is the simplest way to start our business. Advantages of being a sole trader: 1. The owner leads the management or maybe assisted by the family or employees. 2. All profit generated by the business could be called as personal income or profit.
Disadvantage of being a sole trader:1. The sole trader has unlimited liability. In other words the business should fail so the sole trader is responsible for all debts. All personal assets can be seized to pay of debts (shop, equipment, house, cars, furniture, etc.).
We should continue with the partnership that is also in the small business category. Partnerships are formed between two or more people in business together with the purpose of making a profit. There cannot be more than twenty partners otherwise it could be a professional organisation like a solicitors or accountants. There is another form of partnership called Limited Partnership where the registration is required at the Companies House.
However the changing needs of partners involved, it is advisable to contact a solicitor to draw up a legal Deed of Partnership to agree specific terms (like profit sharing ratio, names of partners, address, function, etc.).
Advantages of forming a partnership:1. Like the sole trader, the common form of partnership has no separated legal identity so it doesn't need to be registered at the Companies House. 2. Liability for business failure is shared with a business partner.