Distinction standard work. Includes appropriate images, and is extremely well formatted and put together. Using the information from this assignment will ensure you get a great mark.
SOLE TRADER
PRINCIPLES
A sole trader business is owned and controlled by one person. It is the most common type of business
and is found in a wide range of activities (for example, window cleaning, plumbing, electrical work).
OWNERSHIP
Private businesses are those owned by the citizens and therefore they are liable for all the aspects of the
business. The owner of the private business is likely to take many risks as he is in the business to make a
profit. Also, business finances are kept separate from personal finances, therefore, if the business fails,
owner’s personal assets such as homes, cars cannot be used to pay off any debt.
PURPOSE
The main purpose of sole trader is to earn the maximum profits while bearing all the risk for it.
CAPITAL STRUCTURE
The capital structure is how a firm finances its overall operations and growth by using different sources
of funds.
There is no separation or “limited liability” personally from the business’ debts or liabilities. This means
that you are personally liable for any obligations which arise from your business’ operations. If the
business is sued, you can be forced to use your personal assets, including your home, to settle any debts.
The concept of being one entity also means that a sole trader only could raise as much capital as banks or
other lenders (including family and friends) are willing to loan the individual.
LEGAL REQUIREMETS
To make sure your sole trader business stays on the right side of the law refer to the relevant Acts of
Parliament:
Trade Descriptions Act 1972: makes it a criminal offence to knowingly make false or misleading
claims – verbal or written – about goods or services you offer. This means such factors as ingredients,
place of manufacture and customer testimonials as well as associating yourself with a brand without
being entitled to.
Sale of Goods Act 1979: dictates that goods you sell must be of satisfactory quality, match your
promises of performance and be as you describe them.
Supply of Goods and Services Act 1982: commits you to undertake services you offer with
reasonable care, skill, time and cost.
Data Protection Act 1984: directs you to register the source, nature and purpose of any personal
data you keep about individuals except data used for internal administration like payroll. Registration
forms are available at post offices.
Consumer Protection Act 1987: holds you liable if you supply a faulty product causing damage or
injury unless you can show that not enough was known about its dangers at the time of supply. And
to protect yourself under this Act offer an estimate first and a written quote only when you have
properly assessed costs.
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