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Explain two differences between a Sole Trader and a Partnership as forms of business ownership - Leaving Cert Business - Question A - 2018
Question A
Explain two differences between a Sole Trader and a Partnership as forms of business ownership. A Sole Trader business is owned and controlled by one person. This p... show full transcript
Worked Solution & Example Answer:Explain two differences between a Sole Trader and a Partnership as forms of business ownership - Leaving Cert Business - Question A - 2018
Step 1
Explain two differences between a Sole Trader and a Partnership as forms of business ownership.
Answer
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Liability: A Sole Trader has unlimited liability, meaning the owner is personally liable for all debts of the business. In contrast, a Partnership also has unlimited liability, but this risk is shared among partners. Hence, individual partners are not entirely responsible for all the business's debts.
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Ownership and Profits: A Sole Trader is solely owned by one individual who retains all profits generated by the business. Conversely, a Partnership allows for multiple owners where profits are shared among partners based on the agreed terms, leading to potentially greater financial resources.