Disadvantages of my business
I have unlimited liability in ownership of sole trader it means I will lose all the personnel belonging and I can be bankrupt. As the owner of the business I need to work long hours because I am responsible for the day-to-day running of the business. Illness and sickness can cause problems to the business because there is no one to take responsibility of the business.
I need to specialise in all areas of my business such as checking expiry dates and how to promote the business and when to purchase the products. The ownership of business Sole trader: one person owns this type of business and he or she is responsible for the profit or loss of the organisation. If the business is successful he can keep all the profit if the business is unsuccessful the owner loses money. Sole traders have unlimited liability. Advantages
It can be set up easily because there is no legal procedures in setting up a sole trader kind of business and it is also easy to make decision because there is no one to consult and we have personal contact with the customers in the local area and all profits belong to the owner because he is responsible for the success or failure of the business and the business affairs can be kept private except for completing tax returns and they can work flexibly such as choosing their own hours. Disadvantages
It has unlimited liability if the business is not successful the owner may intent lose his personnel belongings and the owner need to work long hours because the owner is responsible for the business and illness to owner will affect the business because there is no one to take care of the business. Partnership: this type of business is set up minimum of 2 members to maximum of 20 members and they are responsible for the profit or loss of the organisation if the business is successful they will divide the profit according to investment, however if the business is unsuccessful they all lose money.
Partnerships have unlimited liability. Advantages It can be set up easily because there is no legal procedures in setting up a partnership and more capital can be brought to the business because two or less than 20 person sharing the business. Responsibility of the business is shared so the problem of holiday and sickness and working hours are reduced. Disadvantages It has unlimited liability if the business is not successful the owner may intent lose his personnel belongings and the disagreement between the partners can cause problems and withdrawal of partners can harm the business and the Profits need to be shared.
If a partners act reckless it may affect other partners of the business. Private limited company: in this type of business, the owner and family members have shares and the public cannot buy shares. Shareholders are often directors they need to have 50% shares to have a control whether singly or together in this business there is a minimum of one shareholder and one director and they have limited liability. Advantages It has limited liability. It means the owner will not lose his personnel belonging if the business fails ha may intents to lose the money he invested in the business.
And there is great capital potential because bank and building society willing to give loans on their financial records. There is a Benefit of operating in larger scales such as bulk buying. Disadvantages Transfer of shares may be limited to approve new members and a copy of the audit accounts should be sent to the registrar of companies. Public limited company: this kind of business sells shares to the public and anyone can buy the shares. In this business directors are just salaried employees if a business want to go public they must have more then i??
50,000. They have limited liability Advantages It has limited liability. It means the owner will not lose his personnel belonging if the business fails ha may intents to lose the money he invested in the business. And there is great capital potential because bank and building society willing to give loans on their financial records. There is a Benefit of operating in larger scales such as bulk buying. The shares can be selling to the public and there are benefits from economics of scale Disadvantages
In public limited company Annual accounts must be published and there is Risks of take over companies because shares can be easily bought on the stock exchange and In efficiency may result if a firm becomes very large and difficult to manage Franchises: a franchise is a way of owing or running a business without taking a risk of starting on your own. This kind of business has two responsible parties involved the franchisee and franchisor. The franchisee is the person running the business on a day- day basis and they keep most of the profit, but they have to raise most of the capital and pay initial licensing fees.
The franchisor will often supply raw materials and give help and advice. Advantages In franchise type of business they selling a known name to the public so there is no advertising or promotion cost etc and the Advice, guidance and expertise from the franchisor will help to improve the business and Fewer decision to operate the business and most of the profit is retained by the owner. Disadvantages Some of the profit has to be paid to the franchisor and the owner is not free to make all of own decision, particularly as to the product range or the price at which to sell the product.
Only the franchisor product or services can be sold and they need to work long hours and few holidays Cooperatives: cooperative is a business where there is no boss, the employees are owners and profits are divided equally and the business is run in the collective interest of the work force. Advantages Each worker or owner has a share in the business and an equal rights in making decision and each person has an equal share of the profits. It is possible to form a limited company as a worker co-operative and to have the protection of limited liability.
The workers themselves are not forced to be owners Disadvantages Decision-making can take a long time because there is many person to consult and Good leaders may be stifled and feel they cannot develop their full potential. Central government These are government departments, all dealing with different matters at national levels. A government minister oversees each department and it has own budget. Ministers bid for money each year and the amounts agreed forms part of the main governments budget and it is raised from taxes.
It may be HM Treasury, Ministry of Defences, Department of Transport, Home Offices and Department of Health. Local authorities: local authorities are responsible for local public services. The money is used to provide local government services are mainly from revenue grant, business tax, council tax and they provide services such as education, tourism and highways etc. Public corporations: in this type of ownership, each industry is operated separately with a chairman and a board responsible for the day-to-day operations of the organisation.
Annual reports are submitted to parliament and the accounts are published annually for scrutiny by the publish accounts committee. The organisation received subsidies and grants from the government but was usually expected to pay its way overall. Some of the main public corporations in Britain’s are the post office, the Bank of England and BBC. The ownership that suits my business is sole trader because I am the only owner of the business and my business is not registered with the companies and I have unlimited liability because the money is borrowed on my name not on the business name.
If I set up a private limited company I have limited liability but it should be registered and need more legal procedures while sole trader is easy to set up and don’t need to be registered. Task 8 In order to set up my business I need to have legal requirement such as Insurances, Licences, VAT, Health and Safety, Income tax, Business rates, Trade Description Act and Employment laws. Insurances In order to set up my business I need to meet legal requirement such as insurance for the content (stock) of the shop, premises and life insurances for myself and for the employees who work in my shop.
Licences Before I set up my business I need to apply for off licences to sell alcohol and I need to take test and give oath to the court before the licensing justice. Value Added Tax (VAT) After setting up my business I think to register for vat because when we make more than i?? 56000 revenue I need to register for the VAT. Health and Safety Act of 1979 When I set up my business I need to look at the health and safety of employees and the customers according to Health and Safety Act of 1979.
In order to meet health and safety I need to have fire exit and have good working fire alarms and fire drills for employees in order to act in emergency. Business Rates After setting up my business I need to pay business rates to the local council for providing services such as the Fire services, police services etc. Income Tax I need to pay income tax to the inland revenue of the government if I am going to make less than i?? 56000 per year if I earn more than i?? 56000 I need to pay income tax with VAT. Trade Description Act of 1987
Under this act I need to sell the product that the label of the product says and I need to sell the product for the price advertised. Food Safety Act 1990 According to the food safety act 1990 the food that I sell to the customers should be in good conditions such as the product should not expired. Employment laws When I set up my business I need to employ peoples. When I employ peoples I need to ensure that I work within law such as Employment Rights Act 1996, Sexual Discrimination Act 1975, Racial Discrimination Act 1976 and Disability Discrimination Act 1995. Merit grade
How legal requirement relate to my business idea Insurances I need to insure my shop when I set up my business. In case of an accident, a fire which may result in me losing all my goods and premises, injury or death of an employee when they work for me. If my business is insured I can buy back all that have been lost and continue with my business as usual but if it is not I would not be able to pay all that has been lost and may have to close down my business for good. Licences I need to apply for licenses such as off-licence to sell alcohol because it is illegal in United Kingdom to sell alcohol without an off-licence.
(Refer to appendices 8) Before applying for a license I need to make a plan to show clearly where the liquor will be placed in the stores and I need to make a secure area to keep the liquor. The customers who purchase liquor is not allowed to drink in the premises. After getting the licenses trading standard officers would also need to inspect the premises likewise the fire brigade. It is illegal to sell liquor to police or any one under the age of 18 so I must try to keep within the law. Value Added Tax (VAT)
After setting up my business I need to register for vat if I produce some product or if my annual revenue is more than i?? 56000. I think to register for vat because I am expecting an annual turn over more than i?? 150000. I need to pay three different kind of VAT on product (refer to appendices 9). There is three different kind of vat such as standard rate which applies to most goods and services, reduced rate which applies to fuels and power used in the home and by charities and zero rate which applies to certain goods and services on which you do not need to charge vat.
Small business like mine will need to insure that VAT is paid but it is also difficult to the vat in the first year after starting up in business because in the first year there will be too many expenses and most people will not be aware of my business. Health and Safety Act of 1979 When I set up my business I need to look at the health and safety of employees of my shop and employees of some other organisation who come to provide a service such as to repair my shop and the customers.
As an employer I need to make proper fire exit and fire alarm and to make fire drills for employees in order to act in emergency and I am responsible for the employees and customers when they work or buy their product in the shop. I need to ensure that I met health and safety regulation and work within law. Health and safety laws will helps to provide safety of employees and customers and it is necessary to met health and safety law in any kind of business in united kingdom Income Tax
After setting up the business I need to pay income tax to the inland revenue department of the government because according to law in government if a person is self employed should pay income tax if a person is not self employed then he need to pay tax and national insurance contribution to the government. It is difficult to pay income tax in the first few year after starting up the business as a new comer to the market I will have more expenses and it takes few years to make profit. Business Rates After setting up my business I need to pay business rates to the local council.
I need to pay business rates to the local council for their contribution in the local area so they can provide better facilities in the local area improving services such as police, fire brigade and social security services in local area. It is very difficult to pay business rates because whether the business is successful is or not I need to pay business rates. Trade Description Act of 1987 After setting up my business I need to obey certain laws such as trade description act which says that I need to sell the product for the prices it is published cannot sell more than that but I can sell less that that prices.
If I sell more than the price I published it is against the law. I need to ensure that I work within law in united kingdom but it is difficult to met laws such as trade description act in small business because I cannot employ specialised people as supermarkets in order to met laws and regulations. Employment laws When I set up my business I employ peoples. When I employ peoples I undergo many laws such as Employment Rights Act 1996, Sexual Discrimination Act 1975, Racial Discrimination Act 1976 and Disability Discrimination Act 1995.
I need to ensure I work within law these laws are came to force in order to prevent the employees are discriminated by the employers. As an employer I need to use pay slip to my employees explaining about their deduction including gross pay and net pay and I need to give written contract of employment within two month to the employees if I fail to met these kind of law I can be taken to the tribunal court. It is hard to met employment laws in small business like myself. There are many laws that affect small business like mine such as minimum wage act under this act I cannot pay an employee less than 4. 50 it is difficult to meet like this law in sole trader kind of ownership.
Distinction Ownership that suits my business I can work flexibly and I can choose my own working times to work in my shop and I can make easy decision because there is no one to consult. I am the only owner of my business and I think I have the potential to succeed and I can keep all the profit and this encourage me to make good decisions because I am the owner and I am working for myself. The product I am going to sell
I think my business is going to be succeeded because the product I am going to sell such as Cigratees, groceries, alcohol, Bus passes, newspaper, e-top up, electricity and gas charge and lottery. All kind of services that I am going to provide is not provided by any supermarket or shop in the local area.
Market research From my market research that I came to know the average spending of my potential customers is high in the area I want to set up my business because a family in east ham spend more than 100 per week on groceries, cool drink, Cigratees and alcohol.
In my business I provide many services such as lotto, buss passes and newspaper so the customers of my competitors may be encourage to buy products from me in order to cut the shopping time. Gap between the markets. There was a gap between the markets the peoples in High Street South travel to high Street North in Manor Park to buy their product I think after opening of my shop the peoples in High Street South may intent to buy the products from me in order to cut the travelling time.
My promotion method I am going to provide free delivery on groceries if they are going to buy more than i?? 50 and I am going to deliver newspaper freely to their home. The promotion I used to attract customer is not used in local sole trader kind of business and this can attract customers from my major competitors such as Seelan Enterprises, KSP Super Foods and Judiya enterprises.