GCSE Business Sole traders and partnerships

Which type of business may have just one owner?

• Partnership

• Sole trader

In law sole traders and partnerships do not exist separately from their owners

• True

• False

What is meant by the term 'unlimited liability'?

• Owners do not have to use their own money to pay the debts of their business.

• Some sole traders do not know how to manage a business effectively.

• If a partner is lazy the business cannot remove them.

• The owners of a business have personal responsibility for paying its debts.

Sole traders and partnerships have unlimited liability

• True

• False

Which of the following are advantages of setting up partnerships?

• If a partner leaves suddenly the business no longer exists

• More than one investor

• Only one person makes decisions

• Partners may have different skills

Which of the following is an advantage of being a sole trader?

• The owner has complete power over the business

• The owner may have to work long hours

• With only one investor money for investment may be limited

• It is very easy to set up a sole trader business

Which of the following is NOT required to start a business as a sole trader or a partnership?

• Legal documents

• A large amount of money

• An owner or owners

• A name for the business

Which of the following are disadvantages of being a sole trader?

• A lot of pressure and responsibility on one person

• Independence

• Unlimited liability

• Decisions can be taken quickly

Which of the following are disadvantages of partnerships?

• Unlimited liability

• Easy to form

• Easy to grow by adding more partners

• Partners may disagree about the direction of the business

Why do lawyers often form partnerships?

• Experts from different areas of the law are brought together so they can serve more customers

• They need huge amounts of money to start a business

• They do not have to worry about unlimited liability because they have limited debts

• The law requires them to do so