Understanding Business Structures

What is a sole trader?

• A sole trader is an individual who owns and operates a business independently.

• A sole trader is a government-owned business.

• A sole trader is a corporation owned by shareholders.

• A sole trader is a partnership of multiple individuals.

What are the advantages of being a sole trader?

• Limited liability protection

• Shared decision-making

• Higher tax rates

• Advantages of being a sole trader include full control, simplified taxes, minimal regulations, keeping all profits, and operational flexibility.

What is the main disadvantage of a sole trader?

• Limited access to capital

• Unlimited liability

• Difficulty in hiring employees

• High taxation rates

How is a sole trader taxed?

• A sole trader is taxed on their total revenue.

• A sole trader pays a fixed corporate tax rate.

• A sole trader is exempt from income tax.

• A sole trader is taxed on their business profits as personal income.

Can a sole trader employ others?

• A sole trader can only work alone without employees.

• Only corporations can employ others.

• Yes, a sole trader can employ others.

• No, a sole trader cannot employ anyone.

What is a private limited company?

• A private limited company can freely sell shares to the public.

• A private limited company has unlimited liability for its owners.

• A private limited company is a type of government-owned business.

• A private limited company is a business entity that limits owner liability and cannot sell shares to the public.

What is the main benefit of a private limited company?

• Limited liability protection for shareholders.

• Easier access to public funding.

• No requirement for financial transparency.

• Unlimited liability for shareholders.

How many shareholders can a private limited company have?

• More than 100 shareholders

• Up to 50 shareholders

• Exactly 25 shareholders

• Up to 10 shareholders

What is the liability of shareholders in a private limited company?

• Shareholders are personally liable for all company debts.

• Shareholders can lose more than their initial investment.

• Shareholders have unlimited liability for company obligations.

• Shareholders' liability is limited to their investment in shares.

What is required to set up a private limited company?

• Choose a name, appoint directors and shareholders, prepare legal documents, register with authorities.

• Register as a sole trader, file for bankruptcy, sell shares publicly, create a partnership agreement.

• Select a location, buy office furniture, hire a lawyer, open a bank account.

• Choose a logo, hire employees, create a website, launch a marketing campaign.