1.2 BUSINESSES SOLE TRADERS AND PARTNERSHIPS Unlimited liability risks include losing money, personal belongings and even one s house to pay debts. There are many different types of business organisations in the private sector. Their structure depends on: who owns them, how they are financed, who shares the profits, who manages them, Can you think of any decisions that have to be made? Why do you think this is so? Why is this? what kind of liability there is. Sole traders A sole trader is the simplest form of business enterprise. There is only one owner who is also the only one who finances and manages it, though he may employ other people. He has unlimited liability, meaning he risks losing all his personal assets in the case of debts or bankruptcy, but he earns all the profits. Some examples are carpenters, decorators, or plumbers. ONLINE RESOURCES A business start-up asset: bene duty: dovere liability: responsabilità loss: perdita misunderstanding: malinteso mutual: reciproco plumber: idraulico ratio: proporzione settlement: liquidazione withdrawal: ritiro 28 The basics Advantages and disadvantages + The owner is the sole manager, which means he is the only one to make decisions. + The owner gets all the profits. + It is easy to set up; there is little bureaucracy involved. + The business can offer a customised service to customers. The owner is responsible for all the company s debts. The owner has trouble taking time off and taking holidays. The owner has a limited amount of capital to invest. The owner is alone with decision-making. Prices tend to be higher. Partnerships A partnership is chosen when more than one owner is necessary, not only to increase capital, but also to share losses and responsibility, in fact there can be from two to twenty partners. Some examples of these businesses are accountants, lawyers, or doctors. There are two types of partnerships: Unlimited or ordinary partnerships (s.n.c. in Italy), in which all members have an active role in running the business and have unlimited liability; Limited partnerships (s.a.s. in Italy), in which there are two types of partners: general or ordinary partners, who run the business and have unlimited liability (there must be at least one); sleeping partners, who simply invest money in the business without taking an active role in it and with limited liability. Advantages and disadvantages + There is more capital available to finance the business. + Each partner shares their personal experience and know-how for the benefit of the business. + Partners can share decision-making and ideas. + Risks are shared and some members have limited liability. Profits are shared. General partners have unlimited liability. There is the risk of having dishonest and inefficient partners. Discussions among members can slow down decision-making.