What is unincorporated business?
Sole traders and Partnerships are an example of unincorporated businesses.
A sole trader is set up, owned and run by one person, such as a traditional corner shop.
A partnership can be set up and run by multiple businessmen, and tend to be the professions (such as the dentists and doctors).
Advanatges include:
- Greater control over the business by the owner
- Quick decisions can be made
- Small-scale business, so small amounts of capital needed
Disadvantage of unincorporated businesses is that they have unlimited liability. This means that the owners themselves can be held responsible for any debts a business may incur. So the owners’ own personal savings have to be used to pay the debts.
other disadvanatges:
- Small-scale nature makes it difficult to expand.
- Responsibility cannot be shared easily - especially if sole trader
