case study1

Case Study 1
Questions:
1. List the main business organizations recognized by Scots Law.
2. Given the fact that Lisa will be running the business herself and, for the time being, she is unlikely to be employing anyone, how would you classify her business?
3. Identify two advantages and two disadvantages of the type of business organization run by Lisa
Case Question 1
The main business organizations recognized by Scots Law are:
Sole trader
Partnership
Limited liability
Private company
Public company
Question 2
Lisa is running a very small business, so the most appropriate form of organization is sole trader. According to the Companies Regulation 1992, Lisa’s organization form does not fit for the condition of private company; such a private company is limited by shares or by guarantee and need only have on member. We can judge that the organization form of Lisa’s company is sole trader.
Question 3
Advantages:
①Total control over her business and does not have to take into account the opinions of any shareholders.
② It is the simplest form of business organization recognized by Scots Law
Disadvantages:
①If the business fail, the sole trader is said to have unli mited liability for any debts or obligations owed to third parties.
③ A business expansion requiring a major injection of capital might entail a loss of control over the business because new members who are a source of new finance will almost certainly demand a say in the running of the business.。