Introduction
Characteristics of a Sole Proprietorship
A sole proprietorship is a business owned by a single individual. This sole owner is responsible for the entire business and is the sole recipient of the business's earnings. Unlike other legal structures, the sole proprietorship requires less paperwork and is subject to few business restrictions and regulations.
Ownership
As the sole proprietor, the business owner makes all business decisions. The owner controls and manages the proprietorship while creating and implementing changes. The sole proprietor may have several employees, but it is common for the sole proprietor to be the business's only employee.
Liability
As the sole owner of the business, the sole proprietor accepts complete responsibility for the business's liabilities, as well as its income. The owner is financially responsible for the business's debts, expenses and payables and creditors can garnish the sole proprietor's personal income if the business falters or fails.
Risk
Since the sole proprietorship accepts all the risk, the proprietorship is often subject to less restrictive regulations than partnership and corporation entities. The sole proprietorship is not required to charter the business with the state, though the business may be required to register the business's name and operations.
Characteristics of a partnership
A partnership is an unincorporated association of two or more individuals to carry on a business for profit. Many small businesses, including retail, service, and professional practitioners, are organized as partnerships.
Mutual Contribution. There cannot be a partnership without contribution of money, property or industry (i.e. work or services which may either be personal manual efforts or intellectual) to a common fund.
Division of Profits or Losses. The essence of a partnership is that each partner must share in the profits or losses of the venture.
Co-Ownership of Contributed Assets. All assets contributed into the partnership are owned by the partnership by virtue of its separate and distinct juridical personality. If one partner contributes an asset to the business, all partners jointly own it in a special sense.
Mutual Agency. Any partner can bind the other partners to a contract if he is acting within his express or implied authority.
Limited Life. A partnership has a limited life. It may be dissolved by the admission, death, insolvency, incapacity, withdrawal of a partner or expiration of the term specified in the partnership agreement.
Unlimited Liability. All partners (except limited partners), including industrial partners, are personally liable for all debts incurred by the partnership. If the partnership can not settle its obligations, creditors' claims will be satisfied from the personal assets of the partners without prejudice to the rights of the separate creditors of the partners.
Task
“The Government of Jamaica is contemplating forming a partnership with a private sector business in order to get the railways of the country back into operation. Advise the minister of Transport as to why the type of business that you were assigned would be the most suitable for operating the railways of the island”
Process
It is advisable that you work in pairs so that you may present your information from two different perspectives. Also, it may be very helpful to re-read the information presented in the process and also browse through the information presented in below before you attempt completing the task.
Here are some sources that you may use for further information:
Evaluation
Write a letter to the minister of transport in response to the situation stated in the "Task" to be submitted by email to princessjay123@yahoo.com.
Conclusion
Hhow has this unit been beneficial to you? Write a journal entry summarising everything you learned in the unit "Types of Businesses".