LAW 122 Lecture Notes - Lecture 6: Professional Negligence In English Law, Authorised Capital, Numbered Company
Document Summary
It arises once a person carries on business on their own (i. e. cutting lawn for money) There"s no separation between the business and proprietor (owner). Proprietor cannot be employee of the business. Sole proprietor is responsible for performing all contacts. Business" income or loss is included with the owner"s personal income. Proprietor is responsible for all torts committed personally in connection with the business. Also vicariously liable for torts committed by employees. Advantages are that it is simple to start, simple to administer and that there"s possible tax advantages. Disadvantages include unlimited personal liability, only being able to raise money by personal borrowing, and that as the business grown, these will continue to grow. Unlimited personal liability means that 3rd parties may take all owners" personal assets to satisfy business obligations. The conclusion is that a sole proprietor is best suited for small businesses. The name must be registered if it"s something other than the owner"s personal name.