(a) http://courses.chalkface.com/public_html/encyc/partner-adv.html
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(b) A sole trader is a type of business association and is among the different kinds of organization that exist in a business environment. A sole trader means that if you own the business, you will earn all the profit of the business. There are other types of business organizations such as partnership or limited companies.
A partnership business is where you and your another partner own the business.
A sole trader and a partnership both have unlimited liability. The owner has to be responsible for all the debts of the business. He or she may need to sell personal assets to help pay for the debts of the business.
Besides that, a sole trader and a partnership both are not a separate legal entity from the owner. The business does not exist in the eyes of the laws. The owner is a legal entity. This means that any debts are the single owner’s debt. Furthermore, they operate in the private sector of business.
On the other hand, a sole trader and a partnership have similar goals or objectives for example, survival, make a profit and by raising the market share.
A sole trader and a partnership are both probably to finance in a similar way, for example bank loan, personal savings or from friends and family.
A sole trader is owned by only a person whereas there is between 2 to 20 people for partnership business.
Besides that, a sole trader has to make decision at the final whereas a partnership can discuss decisions with their partner and get other people’s opinion and ideas.
A sole trader needs to be fully responsible for the business and whereas a partnership can be specialisation of each partner.
A sole trader can receive all the profit earned by the business as the profit belongs to them whereas a partnership has to share out all the profit in pre-designated proportions between partners and taxed as personal tax.
(c) While limited companies are companies that can offer shares to increase capital. Although limited company is complicated, but somehow sole trader can will face difficulties in raising funds for expansion, that is the reason limited companies are formed, they can raise funds from the public.
A sole trader and private company both have the same goals and objectives. Besides that, a sole trader and a private company both have the same accounting entity.
Lydia should convert the business into a partnership business.
http://courses.chalkface.com/public_html/encyc/partner-adv.html
This is because setting up a partnership business is quite simply. The procedure that is required is to find an amount of people that concerned to agree to share the decisions and the opinions within a business, or start working together to joint owners of a business. They are considered to be partners and will share the profit among their partners.
Besides that, if there is more than one owner, it is easier to set up a business as more cash is contributed and available.
Furthermore, bringing in a new partner can provide expertise, skills and experience that may help the business to earn more profit.
A partnership business can share out the responsibilities between the partners. This means that they no need to be responsible all by one person.
If the business faces difficulties or went bankrupt, the partner can help to share out the burden and the partner has to share the cost with you.
A partnership business can be expand easily as more money is contributed by the partners of the firm to buy new or extra machinery, or to upgrade the machinery.
The financial details are private and confidential and are only revealed to the government departments. Some people do not like to reveal their financial accounts to public.
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The business may suffer if the owner becomes ill or goes on holiday. A sole trader may face difficulties when he or she needs to take holiday or sick leave as it is hard for them to find replacement.
Sole traders has to work for a very long hours as he or she is working for themselves and is the only one who is responsible for business. In that case, they can earn extra profit if they work longer hours for their business.
Due to they will be get bankrupt easily, it is difficult for them to raise the money because many banks and other lending institutions might be reluctant to lend to sole traders.
Sole trader needs to pay at a higher price and may be more expensive because sole trader business are normally small and are unable to buy materials in bulk and and is not benefit from it.
Sole trader is a unlimited business. He or she needs to be fully responsible for all the debts incurred. The owners might lose all of their personal possessions and worst to worst they will go bankrupt if they cannot pay the debts of the business.