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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
Answer
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Ownership and Control: A Sole Trader is owned and controlled by a single individual, who has complete authority over business decisions and operations. In contrast, a Partnership consists of two or more individuals who share ownership and collectively make decisions regarding the business.
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Liability and Profit Sharing: A Sole Trader carries unlimited liability, meaning they are personally liable for all business debts. Therefore, if the business fails, creditors can pursue the owner's personal assets. A Partnership also has unlimited liability; however, the responsibility for debts is divided among the partners according to their agreement. Additionally, profits in a Sole Trader model go entirely to the owner, while in a Partnership, profits are shared among partners based on their ownership percentages or agreed terms.