Notesale: Turn your study into money

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It is the easiest and most practical form of business
structure
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On
the other hand, he is personally liable to pay for all the debts and
obligations by the business
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Decisions can thus be made quickly and without the compulsion
of consultation or approval from any other quarters
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It often requires
less formality and less paperwork
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Full Profits: The sole trader retains all the profits accruing from the
business; this is a direct financial reward for effort and success
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Disadvantages of Sole Trader
Personal Risk: The business is solely dependent on the personal
capability and responsibility of the sole trader in incurring all
liabilities and debts
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Difficulty in raising capital: Raising capital is difficult as the sole
trader depends upon his personal savings, loans from friends,
relatives, and local banks, who prefer to have more options for
large funds
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This may also mean reduced growth and developments in
solving other business needs efficiently
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Eventually, this
may mean a high workload and potential burnout
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This might
further not be easily scalable, except when there are further
supports or investments
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It also lacks proper
structure as far as handing over the business to others is
concerned
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The
partners put in resources, in the form of capital, skills, and labor,
and share the profits and losses according to mutually agreed
terms
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Workload Distribution: The partners can share responsibilities and
tasks, which will reduce the amount of individual stress and
workload that may happen
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Easy to Establish: Generally speaking, partnerships are easier
and less expensive to set up than corporations
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Operational Flexibility: Due to the less formal structure of the
business, partnerships are easily adaptable to changing
environmental or market conditions
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This avoids double taxation
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Such risks even extend to
their personal assets
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Sharing of Profits: Profits are to be shared as per the partnership
agreement
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Continuity of Business: Partnerships run the risk of non-continuity
in case any one of the partners withdraws or dies
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Slower Decision-Making: In partnerships, the decisions take more
time as they need unanimous acceptance or a vote, and that
affects the speed of business to certain extents
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Limited Partnership:

It consists of one or more general partners who manage the
business and are subject to unlimited liability, and one or more
limited partners who invest capital into the business but have
limited liability and do not actively take part in the daily
management
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It allows for
active management of the firm by the partners without putting
their assets at personal risk

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