1) Which form of business organization do you think is most suitable for each of the following businesses? Explain your answer fully:
a) A young student is planning to offer his services to neighbors as a gardener. He will purchase only cheap tools to start with. (3)
The sole trader form is most suitable for this business, because sole trader is most common form- operated just by one person, and this business is running only by a young student, which is only one person, so he can complete control what he want to does, and easy to set it up.
b) A TV and radio broadcasting business aims to provide services to the whole population regardless of their ability to pay. (3)
For this business, it should choose PLC, since the aim is to provide services to the whole population, and other business organization doesn’t have the ability to running this business that big, as we all know, PLC is most suitable for very large business.
c) A small group of lawyers wish to set up in business together. Their professional association does not allow the lawyers to have limited liability. (3)
Partnership is the best choice for the layers, since the professional association does not allow the lawyers to have limited liability, that’s exactly like partnership, they doesn’t have limited liability but they have more capital to invest and they could have more ideas for the business.
2) Explain two disadvantages of a partnership. (4)
People who in partnership, they doesn’t have ability to have limited liability, more unfortunately, if one of the partners die, the whole business is end, and the number of partnership usually can’t more than 20.
3) Explain two benefits to a sole trader of converting to private limited company status. (4)
When you a sole trader, your resources is very limited, you have nobody to discuss business matter and you don’t have the benefit of limited liability, however when you are in private limited company, you will have a