1What is a sole trader
One natural person trading on their own account
2What type of liability does a sole trader have and why
A sole trader has unlimited liability, because they're personally responsible for all debts incurred.
3What is the correct definition of a partnership?
Two or more persons in business in common with an aim of profit
4What are the three types of partnerships?
Ordinary, LP, LLP
5Where is the definition of an Ordinary partnership found?
Under section 1 of the 1980 Partnership Act.
6What partnership type is a separate legal entity?
LLP
7Are there formal legal requirements for a sole trader when starting/ending the business
No
8What are 3 requirements that a sole trader must do?
1. Register for tax purposes as self-employed (if they make more than £1000 a year) 2. The person must keep up-to-date accounting records. 3. Must register the business name if your own name is not being used.
9Can a sole trader hire employees/contractors?
Yes
10What happens to the sole trader's business if they become insolvent?
The sole trader is declared bankrupt under the Insolvency Act 1986.
11Does there have to be a partnership agreement for an ordinary partnership?
No, although there normally is one
12How is an ordinary partnership's identity viewed in the eyes of the law?
An ordinary partnership has no legal identity, as it is seen as a collection of individuals, not a distinct entity.
13What does section 5 of the 1890 Partnership Act declare?
- Every partner is an agent of the firm. - The firm is bound by anything a partner is expressly authorised to do. - Partners can act within the scope of their usual authority.
14What does it mean to be an agent
An agent is a person whose acts are treated in law as the acts of another person
15What does section 12 of the Partnership Act declare?
every partner is jointly liable for the obligations and debts of the firm, new partners are not liable for things done before they joined, old partners remain liable for debts incurred before leaving.