GK
BUSINESS MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Partnerships provide greater financial strength
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Partnerships provide the opportunity to have limited liability
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The partner may bring other skills and ideas to the business
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Partnerships spread business risks across more people
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Detailed explanation-1: -Increasing tax efficiency is a key reason many sole traders ultimately transition to a limited company. As a sole trader, you are taxed on earnings over a certain amount, whereas this becomes much more efficient when corporation tax is involved. You can pay yourself in dividends and keep more of the earnings.
Detailed explanation-2: -Having more business owners allows the financial and operational responsibility for running the business to be shared. Tasks can be assigned according to skills and the individual workload can be reduced. Flexibility. Conventional partnerships are easier to form than LLPs.
Detailed explanation-3: -No Liability Protection Lack of liability protection exists as one of the biggest disadvantages of operating as a sole trader.
Detailed explanation-4: -Disadvantages of Operating as a Sole Trader Most notably, you are legally and financially responsible for all aspects of the business. Consequently, your personal assets are at risk if there is debt or liability and you do not have the option to share debts and losses with other business partners.