Sole Trader & Partnership

1. Here is where y
presentation be
Business Organizations
Sub-Strand: Types of
Organisations
Strand: 4

2. Indicators
1. Define Business
2. Explain the functions of business
3. Explain a sole trader business, its features, advantages and
disadvantages
4. Explain how the sole trader improves his business
5. Define Partnership and the features , advantages and disadvantages

3. Why do we
need
businesses?
 A business can be
defined as an
organization that offers
goods and services in
exchange, usually for
money.

4. • Production
• Marketing
• Financing
• Managing Human
Resources
• Research & Development

5. Three
Categories of
Businesses
01  Sole Proprietorship
02  Partnership
03  Limited Companies

6. Sole
Proprietorship
01

7. Features
 Owned and operated by a
single person
 Personally liable for any
losses
 Ideal form of business who
wants to start their own
businesses

8. Advantages
 Convenient to set up as there
are less legal formalities
 More control over the
business
 Can enjoy all of the
businesses profits
 Difficult to raise funds to
expand the business
 Owner has unlimited liability for
the debts of the business and
risks losing personal wealth to
pay for these
 Lack of continuity
Disadvantages

9. How can a sole trader improve his business?
• Conduct Promotional
activities .. How?
• Outsource some of the
business functions
• Employ another staff to
lighten the workload

10. Partnerships

11.  Owned and managed by two or more people.
 Sharing profits and responsibilities
 Have a partnrship agreement
 Mos popular among with professions such as
Doctors, Lawyers and accountants.
02
2 Partnerships

12. Features
Formation Partnership Agreement
Decision Making Jointly shared
Profit & Loss Shared
Liability Unlimited Liability / shared
Continuity Lack of continuity
A partnership is an arrangement between two or more people to
oversee business operations and share its profits and liabilities

13.  Decision making is shared
leading to better ideas
 More access to finance
compared to sole traders
 Day to day running of the
business is shared
Advantages Disadvantages
 Have unlimited liability
 Have to share profits

14. Types of Business Organization – Exercise1
1. List three functions of a business.
2. What benefits can you enjoy by
opening a small outlet as a sole
trader?
3. What is unlimited liability?

15. Types of Partnerships

16. 1. Management Involvement ?
2. Do they bring Capital ?
3. Share of profit and loss ?
4. What kind of liability ?
Some features to focus on different Partnerships

17.  These partners operate the
day-to-day activities of the
business on behalf of other
partners.
 These partners are not
actively involved in the
operations of the business
 But they also contribute to
the capital and share losses
and the profit
Active Partners Sleeping or Dormant
Partners
Can you recall some of
the daily functions of a
business?

18.  Allows his or her name to be
used in the business
 Makes no contribution in
terms of capital and
management
 No share in profits or losses
 Unlimited Liability
Nominal Partner

19.  Similar to active partner ,
involved in day to day
running of the business
and shares the profit and
losses
 But these partners are not
known to the general
public
Secret Partner

20.  The phrase refers to a person who
is not technically a partner but can
still be held liable as one for any
debts or damages incurred by a
business or owed to a third party.
 Will not manage the daily
activities
 No capital Contribution
 Not sharing Profit and Loss
 Unlimited Liability
Partner by Estoppel

21. 1. Define Partnership.
2. Explain the difference between active and
secret Partnership.
3. If you are going to start a Partnership, what kind
of business would you start and what challenges
would you face ?
Exercise 2 - Partnership