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Why do some sole traders feel safer if they form a limited company?
Wiki User
∙ 13y ago
limited companies have limited liability so if the company gets into debt, the owners wont have to sell their own property or assets to pay off the debts but sole traders have unlimited liability so they could end up losing there house, car etc. if the business gets into debt because they will have to sell assets to pay off the debt.
Wiki User
∙ 13y ago
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How are sole traders' accounts different from those of a limited company?
Introduction - Limited Company vs. Sole TraderAt some point into a business venture the answer that most of us will need is whether or not to form a limited company.Often, the desire to incorporate (become a limited company) comes from reasons that are more ego amplified and more to do with our perception of what a business should be rather than some of the most important factors such as overhead and profit.Is being a Sole Trader leaving business on the table?Because businesses feel safer dealing with limited companies over sole traders, the biggest reason being a sole trader is a disadvantage would be that you are going to leave business on the table. Business is usually more stable in limited companies.Even though you could leave some business out there being a sole trader. Being a sole trader may very well be more profitable because there's usually not as much administration needed or overhead to maintain the company.
Why do organization feel pressure to grow?
As the saying goes: "Even if you are on the right track, you will get run over if you just sit there." In business, a company needs to continue to expand because other competitors will outgrow it if it doesn't. This refers to the so called "competitive pressure". It must grow to stay competitive, and ultimately to stay in business. Also, it will feel pressure to grow from its owners, investors and shareholders. These individuals, want to profit from the company, and the larger the company, the higher their share of th profit. Finally, the pressure can come from within the company management. Executives will feel the desire to grow and expand to ultimately, have better compensation for their work.
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How are sole traders' accounts different from those of a limited company?
Introduction - Limited Company vs. Sole TraderAt some point into a business venture the answer that most of us will need is whether or not to form a limited company.Often, the desire to incorporate (become a limited company) comes from reasons that are more ego amplified and more to do with our perception of what a business should be rather than some of the most important factors such as overhead and profit.Is being a Sole Trader leaving business on the table?Because businesses feel safer dealing with limited companies over sole traders, the biggest reason being a sole trader is a disadvantage would be that you are going to leave business on the table. Business is usually more stable in limited companies.Even though you could leave some business out there being a sole trader. Being a sole trader may very well be more profitable because there's usually not as much administration needed or overhead to maintain the company.
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