Business Organisation essay sample

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Business Organization

Different business structures have unique operations and are exposed to different regulatory authorities. This paper will analyze four of the business types and evaluate the various documents that are relevant to the stakeholders of the business structures.


The aim of this project is to provide a discussion on the structures of a sole trader, partnerships, and limited companies. This report also explains some of the relevant documents needed by the stakeholders of the various business types.


A sole trader

A sole trader is the simplest form or business structure. It is also the simplest and less expensive business structure to start and maintain. A sole trader could be one individual or a married couple in business alone. This form of business structure enjoys greater flexibility of management, fewer taxes, and fewer legal controls. In this form of business, the sole trader is personally liable for all debts incurred by the business and he or she is also entitled to all the profits and benefits generated by the business (Craig, & Campbell, 2012).

The sources of capital for a sole trader include loans from financial institutions, support from family members and friends, and personal savings. However, the sole trader is liable for all the loans borrowed since a sole trader business has no separate legal entity. This means that a sole trader business has unlimited liability, which means, in case of default of payment of the loans; the sole trader’s personal property may be auctioned to settle the debts (Craig, & Campbell, 2012). In such cases, there is no division between business and personal loans. The sole trader makes all the decisions of the business. He or she might choose to make consultations from financial consultants or close friends and family members but such people are not liable for any loss that might be caused by such decisions. A sole trader business may receive free labor from family members or close friends since the business is often a small entity that might not be having employees. For an individual to start a sole trader business, he is needed to contact his local county or city clerk’s office to establish what is required to operate such a business in the area. If the business involves the sale of products or services in other states, he may need to obtain a federal license or permit. A sole trader business has no perpetual life, meaning that the death of the sole trader could mean the end of the business. The possible stakeholders in a sole trader business could be its owners, suppliers, the government, banks, and customers. For the owners, income statements are relevant in identifying relevant profits and loses that the sole trader experience. Suppliers need credit notes while customers need invoices. Bank statements are relevant for banks to secure funding.


A partnership is an agreement between two or more people who come together to contribute capital, labor, and skills for purposes of running a business and making profits. In a case where the …

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